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Amex cutting 16-year ties with Costco


Costco shoppers may soon have other options for payment. American Express says it is ending its 16-year-old exclusive relationship with Costco next year.

Costco is one of the few big U.S. merchants that accepts only American Express cards. Cards branded by Visa Inc., MasterCard Inc. and Discover Financial Services can’t be used at its warehouse stores.

“We are proud of the value created over many years for Costco, for our card members and for our shareholders,” said Kenneth I. Chenault, chairman and CEO of American Express. “Taking a very disciplined approach, we began discussions on a possible renewal with Costco well in advance of the contract expiration. However, we were unable to reach terms that would have made economic sense for our Company and shareholders. 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.”

The current agreements with Costco are set to end on March 31, 2016. Until that time, all American Express credit cards will be accepted at Costco warehouse stores in the U.S. and on All co-branded cards from American Express and Costco can be used any place American Express cards are accepted through March 31, 2016.

The dissolution will have a big impact on shoppers because Costco is one of the few big merchants that takes only AmEx cards and doesn’t accept Visa, MasterCard or Discover.It isn’t clear yet which cards will be able to be used at Costco after the AmEx partnership ends.

What is also unclear is what effect the change will have on the retailer's bottom line.The warehouse club hasn’t announced any replacement deal and it isn’t even clear that any new arrangement will be exclusive. That means Costco could open its doors to both Visa and MasterCard, and maybe even Discover.

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