Costco has completed a nationwide rollout of membership card scanners at all U.S. warehouse entrances, effectively blocking non-members from entering stores.
The retail giant’s crackdown on membership sharing affects approximately 142.8 million total cardholders worldwide, including 79.6 million paid household members. The initiative represents one of Costco’s most significant operational changes in recent years.
How the New Scanning System Works
The new system requires all shoppers to scan either their physical membership card or digital QR code at designated scanners before entering the store. An attendant is stationed at each entrance to assist with the scanning process and verify identities.
The scanner displays the member’s photo on file, allowing employees to confirm that the person entering matches the membership account on record.
Photo Verification Requirements Tighten Security
Members whose cards do not have a photo on file must present valid photo identification when scanning into the store. This additional security measure ensures that membership cards cannot be easily borrowed or shared among multiple individuals.
The photo verification system creates an additional layer of accountability, making unauthorized entry significantly more difficult for those attempting to circumvent membership requirements.
Non-Members Face Strict Entry Restrictions
Under the new policy, non-members can only enter Costco warehouses if accompanied by a valid cardholder. This eliminates the previously common practice of borrowing a friend’s or family member’s membership card to shop independently.
Guests who enter with members are permitted to browse but cannot make purchases on their own account, ensuring membership benefits remain exclusive to paying customers.
Expired Memberships Flagged Immediately
The scanning technology instantly identifies inactive or expired memberships, directing affected shoppers to the membership counter before they can enter the sales floor. This proactive approach eliminates the awkward scenario of customers discovering their membership has lapsed only at checkout.
Members now receive advance notification about expiring memberships, giving them the opportunity to renew before any disruption to their shopping experience.
The Business Case Behind the Crackdown
Costco’s membership fees represent a crucial revenue stream for the company, generating $4.6 billion in fiscal year 2023 alone—an eight percent increase from the previous year. Company executives stated firmly that they don’t believe non-members should receive the same benefits and pricing as paying members.
The crackdown aims to protect this revenue while maintaining fairness for customers who pay annual fees.
COVID-19 Relaxations Led to Increased Sharing
The enforcement initiative stems from increased membership sharing that occurred during the COVID-19 pandemic. Former CFO Richard Galanti acknowledged that more people had been sharing memberships since 2020, when enforcement was relaxed as customers requested others to shop on their behalf.
This temporary accommodation led to lasting habits that Costco now seeks to correct through technological enforcement.
Phased Implementation Over Two Years
Costco’s membership enforcement rollout occurred in phases beginning in 2023. The company first implemented photo ID checks at self-checkout lanes, then tested entrance scanners at select locations in early 2024.
By the end of 2024, the nationwide deployment was complete across all U.S. warehouses, bringing American stores in line with European locations that have used entrance card readers for over two years.
Operational Benefits Extend Beyond Security
CEO Ron Vachris highlighted multiple operational advantages during the company’s fourth-quarter earnings call. The scanning system provides real-time traffic monitoring, enabling managers to adjust staffing at checkout lanes according to actual customer flow.
Fresh food inventory management has also improved, as operators can better predict demand based on accurate entrance counts throughout the day.
Checkout Process Receives Major Upgrade
Beyond entrance security, Costco has enhanced its checkout technology across all U.S. warehouses. Employees can now scan small and medium-sized transactions while members wait in line.
When shoppers reach the cashier, items no longer need to be removed from the cart—only payment is required. This innovation significantly reduces checkout time and enhances the overall shopping experience for members.
Scan-and-Pay Technology in Testing Phase
Costco is also piloting “Scan & Pay” mobile technology in partnership with Instacart, similar to the systems offered by competitor Sam’s Club, which is owned by Walmart.
CEO Vachris described the early results as “extremely successful” for moving customers through lines more quickly. This technology allows members to scan items with their smartphones and pay without waiting in traditional checkout lines.
Theft Prevention a Key Motivator
Retail security experts and members alike have noted the anti-theft benefits of the new entrance system. Previously, individuals could enter stores using fake or borrowed membership cards and proceed to shoplift merchandise.
The photo verification requirement makes this significantly more difficult, particularly during winter months when bulky clothing makes concealment easier. Members have widely praised this security enhancement.
Member Response Largely Positive
Existing Costco members have responded favorably to the changes on social media platforms. Many expressed relief at avoiding checkout conflicts with non-members, who had previously expressed surprise at the membership requirements.
Others compared the system to gym memberships, noting the consistency of requiring identification to access member-only facilities. The policy has received broad support from the paying customer base.
Exceptions Remain for Certain Services
Despite stricter enforcement, some exceptions to the membership requirement remain in place. Non-members seeking pharmacy services can still access the Costco pharmacy without a membership card, as required by law in many states.
Additionally, the food court at some locations remains accessible to non-members, though policies vary by location. These exceptions ensure compliance with regulations while maintaining the core membership model.
Industry-Wide Implications for Warehouse Clubs
Costco’s aggressive enforcement strategy may influence membership policies across the warehouse retail sector. As the company demonstrates that stricter controls can be implemented without significantly impacting customer satisfaction, competitors may follow suit with similar technologies.
The successful rollout proves that membership-based retailers can effectively protect their business models while still delivering convenience and value to legitimate cardholders.