Costco (NASDAQ:COST) took a major risk one year ago when the company dropped its longtime credit card partner American Express in favor of Visa provided by Citigroup.

With the switch, Visa not only took over the company's rewards credit card, it also became the only credit card accepted by the chain. That piece of exclusivity made the move even more dangerous for the warehouse club because it has a significant base of business customers -- an audience known to use American Express.

In addition, while Costco publicized the change for months to its rewards card holders, the actual switch was abrupt. On June 19, the old American Express cards were accepted at the chain's retail locations, but when stores opened on June 20, those cards no longer worked. At that point, Costco only accepted Visa and its new Visa Anywhere Rewards cards.

It was a tricky change for rewards cardholders who received the new cards in the mail, but had to activate them. That led to more than 1.5 million calls to Citigroup, according to Jennifer Bombardier, a spokeswoman for the card issuer.

"With any conversion of this magnitude and a brand this beloved, call volumes were unprecedented," she told The Motley Fool via email. "As a result, some customers experienced longer-than-desired wait times in the first few days of the launch."

That volume fell within a few days, but that's not the only measure of success. The challenge for Costco was, would consumers make the switch to the new card, and would the chain be hurt by not taking American Express in general?

A Costco store

Costco only accepts Visa, not any other credit card. Image source: Costco.

How did Costco do?

Despite the short-term confusion caused by the switch, Costco appears to have emerged in a stronger position one year later. CFO Richard Galanti explained the numbers during the chain's Q2 and Q3 2017 earnings calls.

"We began last June 20 with approximately 11.4 million co-branded cards, or about 7.4 million accounts being transferred to Citi for a conversion to the new Citi Visa Anywhere card," he said during the Q2 call. "As of Q2 end, just under 90% of these accounts transferred have been activated, recognizing all accounts transferred to begin with, were not activated. And I think, it was down in the low 80s at the time -- low to mid 80s."

That means under the new program, not counting any new additions, Costco had more active members for its new card than its previous one. In addition, Galanti added during the third-quarter call, that "as of Q3 end we now have about 1.5 million new approved member accounts, which represents about 2 million new cards since the last June 20th." Nearly 300,000 of those accounts were activated in the third quarter.

On top of that, Costco has posted same-store sales gains during every quarter since the switch. In addition, Galanti said, "we are seeing the Citi Visa co-branded portfolio total spend higher year-over-year, both organically from cards converted to Citi last June and from these new accounts."

This is a big win

Costco took a risk by switching from American Express to Visa, even though it did get a better deal for itself and its customers. It risked consumers being unwilling to make the move, and there was the possibility that non-rewards card holding American Express users would choose to shop elsewhere.

The warehouse club also took the chance that it would burn some of the good will it had built up with its customers, perhaps leading to a drop in renewal rates. That simply did not happen. The chain has seen its U.S. renewals remain in line with historical norms, and overall, cardholders have continued to grow every quarter, climbing by 800,000 in the third quarter.

That's a win for the company and for its rewards card holders, who after the switch got an increase on cash back from gas purchases from 3% to 4% (for the first $7,000 spent in a year, up from a $4,000 limit). The new card also increased givebacks from 2% to 3% on restaurants and eligible travel, while returning 2% cash back on all Costco purchases. This is not the type of change Costco, or any chain, would want to make very often, but after some small bumps, the warehouse club has clearly pulled it off.

Daniel Kline has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Costco Wholesale and Visa. The Motley Fool recommends American Express. The Motley Fool has a disclosure policy.