http://www.theglobeandmail.com/report-on-business/capital-one-said-to-replace-amex-as-costcos-canada-card-issuer/article20665637/

Costco came up with a new idea about targeting more customers and increasing revenue by offering no-limit reward card from Capital One Financial.

I think, with marketing strategy like this, customers are likely to get a membership card since it’s free to get one. Which means getting more constant customer flow. Offering a percentage cash back is a effective way to gain larger revenue compared to offering point credit as majority of markets do, such as Save on Food, Walmart and so on. Because customers can take advantage of this new no-limit reward card and get relatively high rate cash back even after a one time purchase as long as they get a free membership card, which potentially rise their willingness to pay.

Furthermore, this is considered to be a gain for customers as well. There is benefits that costumers can reap from using Capital One Platinum MasterCard, such as getting cash back on purchasing not only in Costco, but in other restaurants, groceries, gas purchases etc. For becoming a member of Costco, customers can 1.25% cash back without annual fee and a teaser rate of 5% for the first six months. A high teaser rate is a smart choice since a 5% cash back, which is over 200% of rate they can get from saving in bank, for purchasing in gas stations, grocery stores and restaurants sounds appealing enough to make customers choose to shop in Costco rather than other similar supermarkets.

Article Link:http://business.financialpost.com/2014/10/01/costco-customers-offered-no-limit-reward-card-from-capital-one-financial/