For 16 years, American Express has been the only credit card accepted in Costco’s stores, but that exclusive arrangement will come to an end on March 31, 2016, AmEx announced Thursday.
American Express and Costco could not reach an agreement that would have continued their partnership beyond March of next year, ending their current co-brand and merchant acceptance agreement. The announcement comes less than six months after Costco’s Canadian division made a similar move, dropping its AmEx partnership in favor of one with MasterCard and Capital One.
When it comes to credit cards, Costco is a rare breed. It is one of the few big U.S. merchants that only accepts AmEx cards. Cards branded by Visa, MasterCard and Discover Financial Services are not accepted at its warehouse stores. Based on 2014 revenue figures, Costco is the second-largest U.S. retailer.
For consumers, the announcement means that all AmEx credit cards and co-branded AmEx/Costco credit cards will be accepted in Costco’s warehouse stores in the U.S. until March 31, 2016.
“We were unable to reach terms that would have made economic sense for our Company and shareholders,” said Kenneth I. Chenault, chairman and CEO of American Express, in a statement. “Instead, we will focus on opportunities in other parts of our business where we see significant potential for growth and attractive returns over the moderate to long term.”
Costco took in $113 billion in revenue for 2014, and American Express was the only credit card with access to those purchases. Chenault told investors Thursday that 2016 is “the year that revenue will be challenging because of the termination of the Costco agreement.”