As I reported in December 2014, Costco US had begun looking for bids from others to provide their co-branded credit card and after the change in Canada, it didn’t really look too promising for American Express. But today they’ve made it official, Costco US and American Express are parting ways at the end of their current agreement at the end of March 2016. This change won’t affect anything until March 31, 2016, so this won’t change things at Costco US or Costco.com in the immediate future.
American Express released a statement this morning making the announcement that they were unable to come to terms with Costco US on a new agreement. American Express will also be holding a live audio webcast today (February 12, 2015) at 8:30 am ET to discuss the implications that the termination of the co-branding agreement with Costco US will have on their business. The live audio webcast will be accessible to the general public through the American Express Investor Relations website at http://ir.americanexpress.com.
I was pretty sure this might be the way that things would shake out after Costco Canada replaced American Express with Capital One last year. However, I had thought American Express might have put up more resistance in the US because of the huge financial gains that being the single credit card accepted by Costco US locations affords them. That relationship gave them a very large and captive audience for years and I can’t imagine that this is good for their business. According to various analysts the loss of the deal with Costco US could result in a loss of anywhere between 15 to 30 cents of profit per share. Ouch!
Costco US has not announced who their new co-branded credit card partner will be, since this announcement was just made this morning. I’d think Capital One might be a favourite given they are the new partner in Canada, but you never know. I’ll keep everyone informed about the new co-branded card as soon as I hear anything. For now though, you can continue to use your American Express cards to make purchases at Costco US locations and on Costco.com.
For more information:
- StreetInsider.com: American Express and Costco U.S. Partnership Agreements Set to End March 31, 2016
- Bloomberg News: AmEx’s U.S. Card Partnership With Costco to End Next Year