Wow, what shocking news. American Express said it will end its U.S. co-branding and merchant acceptance agreement with Costco on March 31, 2016. American Express Chief Executive Kenneth Chenault said the partners were unable to reach terms “that would have made economic sense for our company and shareholders”. Currently, Costco pays a significantly lower rate than the overall average American Express imposes on other retailers. That special arrangement gave the credit card company exclusivity (though debit cards are also accepted).
Starting April 1, 2016, Visa will be the new brand accepted at Costco. In addition, Costco will partner with Citi to offer a new co-branded card that will replace the existing AmEx-Costco card.
Costco didn’t provide many details of the new Citi deal, saying only that it “would provide generous rewards to Costco members.” Costco said it will provide more details about the cards in coming months.