Visa Inc. To Replace American Express At Costco

Costco changes its choice of credit cards network after 16 long years and replaces American Express with Visa and Citigroup.

For the past 16 years, Costco Wholesale has been in agreement with one of the card company giants, American Express. In the long tenure of this partnership, both parties have proved to be very beneficial for the customers that shop at Costco Wholesale. It can be said that Costco Wholesale and American Express were used to each other. However, after 16 long years, the company has announced to part its way with American Express. According to reports, it is said that the company and American Express could not agree to a mutual deal over renewing a contract of this partnership.

When one thing goes, it’s the time for someone else to fill the vacant hole. Costco Wholesale has chosen Visa Inc. (V) as its new choice of credit cards network. Costco said that Citigroup will partner the company for its co-branded cards and together they will replace American Express cards. The company said in a statement, “Costco Wholesale Corporation today announced it has entered into a new co-brand credit card program agreement with Citi and an acceptance and co-brand incentive agreement with Visa. The implementation of these agreements is subject to the purchase of the existing co-brand credit card portfolio by Citi.”

Hence, the company has now entered a new co-branding deal. The agreement signed between both parties tells that the Visa network cards will be effective starting April 2016. The American Express card will no longer be accepted after May 31, 2016 in the retail stores. “Once issued, Costco's co-brand Visa credit card would provide generous rewards to Costco members, serve as the Costco membership card, and would be accepted at Costco locations in the United States and Puerto Rico, as well as all merchants worldwide that accept Visa credit cards,” says the company officials.

Once the time of Visa cards starts, the company will be the only provider of a credit card network for customers of Costco Wholesale in the United States and Puerto Rico stores.

The retail giant said in a press release that the co-branded credit cards would run on Visa’s network. The shares of Visa increased by 2 percent as Costco announced its co-branded partnership with the company and Citigroup to replace American Express whereas there was not much change noticed in the shares of Costco or American Express.

The company has ended its agreement with American Express. According to sources, it is said “the Costco business was worth about $80 billion in billed business annually to American Express.”