In just over a month Costco (NASDAQ: COST) completes its long-in-the-works changeover from partnering with American Express (NYSE: AXP) to a new deal with Citigroup (NYSE: C) for Visa (NYSE: V) branded cards.

The transition which finishes on June 20th has a lot of moving parts which could confuse consumers. It's not actually an overly complicated arrangement, but members of the warehouse club do need to understand what's happening because as of the end of the day on June 19th, their old cards won't work.

What should cardholders do?
The good news for Costco customers holding an American Express card from the store is that they literally have to do nothing except watch the mail for their new card to show up. Information on the new cards began being sent out by Citigroup in April, according to a Costco Web page on the transition.

The new cards will be Citigroup cards branded to Visa. Image source: Citigroup

Current holders do not need to apply for the new card nor will a credit report be pulled before they are issued one. In addition, all rewards earned on the old card will be transferred to the new one.

It's a relatively simple process assuming members opened the mail with their new card rather than assuming it was junk mail or a solicitation. In fact, the only confusing part of the entire transaction is that the old cards work until the end of the day on June 19th and the new ones go live on June 20th. It's an immediate transition and as of June 20th, the old cards will be useless and not accepted anywhere.

As part of its breakup with American Express, Costco will also stop accepting any of the company's cards in its stores. The warehouse club made that very clear on its website:

Beginning June 20, the only accepted forms of payment at Costco warehouses in the U.S. will be Visa cards, cash, checks, debit/ATM cards, EBT and Costco Cash Cards. American Express Cards will no longer be accepted at Costco in the U.S. after June 19.

It's an ugly breakup which may actually leave Costco members in a better position while doing some damage to American Express.

Why did this happen?
Costco and American Express ended their longtime partnership likely because Citigroup/Visa outbid the incumbent for the deal. Neither Costco nor American Express has confirmed what happened, but the warehouse club's members tend to be affluent, frequent-credit card users, who also make large purchases, Nerdwallet's Sean McQuay told USA Today"It's safe to say Visa wanted to win this deal a lot," he said.

The likely competition over winning the deal also benefits consumers since the new cards offer better perks than the previous one. Members who hold the card (which has no fee, but requires you to pay Costco's $55 annual membership charge) ups cash back on gas purchases from 3% to 4% (for the first $7,000 spent in a year, up from a $4,000 limit). It also increased givebacks from 2% to 3% on restaurants and eligible travel, while returning 2% cash back on all Costco purchases, and offers the same 1% American Express did on everything else.

The winners and losers
Clearly Visa and Citigroup are the big winners here as they get access to a user base which American Express CEO Ken Chenault said will impact one in every 10 of his company's cards in circulation, MarketWatch reported. That's a huge number which the CEO noted would impact its earnings in 2016.

AmEx, of course, isn't simply going to walk away from this customer base. Many of those users are likely to receive offers from the company to remain cardholders with a product not branded to Costco. Certainly that will help American Express retain a portion of the customers it's losing, but it won't keep them all and the ones who stay may spend less because of the card not being accepted at Costco.

For the warehouse club, it's fair to call this a small win, with the potential to become a big one. Assuming it manages the switch well it's unlikely to see a drop in membership and the new perks may lead to new people joining while enticing existing members to spend more.