Costco ends AmEx alliance, partners with Citi, Visa
03 March 2015
Costco Wholesale Corp said Citigroup Inc and Visa Inc would replace new American Express Co as its credit partners at its stores from April, next year.
Citi would be the exclusive issuer of Costco's co-branded credit cards, while Visa would replace American Express as the credit card network for Costco's stores.
Visa shares were up more than 2 per cent premarket, while Citi rose 0.6 per cent.
AmEx last month called off the 16-year partnership in which Costco only accepted AmEx cards.
The unusual partnership had seen the New York card company net a substantial chunk of business.
Additionally, AmEx and Costco jointly issued a credit card that could also be used at other merchants.
Citigroup was expected to make vigorous attempts to retain the business.
The AmEx Costco break up had triggered a race among credit-card firms to partner with the fast-expanding wholesale club, which sells everything from car tires to smoked salmon.
Under the agreement, Visa would be the sole credit card network provider for the company's stores in the US and Puerto Rico.
The co-branded credit cards would run on Visa's network and holders of the co-branded cards would enjoy generous rewards at Costco outlets, according to the press release.
The card would also serve as the retailer's membership card, and apart from being acceptable in the US and Puerto Rico, holders could also use the card at any merchant running Visa's credit card network.
The announcement had marked the start of troubled times for the credit card company with JetBlue Airways Corporation also following the Costco lead.
Later, news emerged that American Express had been found guilty of violating anti-trust laws in the US.