Costco is replacing American Express with Visa and Citi
Last month, American Express said it was ending the deal with Costco because "we were unable to reach terms that would have made economic sense for our Company and shareholders."
In a statement, Costco said:
Costco Wholesale Corporation ("Costco") (NASDAQ: COST) 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.
Under the terms of the agreements, Citi, the world's largest issuer of consumer credit cards, would become the exclusive issuer of Costco's co-brand credit cards and Visa will replace American Express as the credit card network for Costco in the United States and Puerto Rico beginning April 1, 2016. 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.
Following the announcement, Visa shares were up about 2% in pre-market trade while shares of AmEx and Costco were little changed.
In notes following the news that Costco and AmEx would end their agreement, analysts estimated that the Costco business was worth about $80 billion in billed business annually to American Express.