American Express Says Costco Agreement Will End March 2016

   By George Stahl 
 

American Express Co. said its merchant agreement with Costco Wholesale Corp. is set to end on March 31, 2016, amid reports that the bulk retailer is negotiating with other credit-card companies.

American Express has been the only credit card accepted at Costco's U.S. stores.

"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," Kenneth I. Chenault, chairman and chief executive of American Express, said in a news release.

Shares of American Express fell 1.8% in premarket trading to $84.46.

Media reports late last year indicated that Costco was negotiating with other credit-card companies, including Capital One Financial Corp and MasterCard Inc. The change already has occurred in Canada, where Costco last year replaced American Express with those other two card companies.

Costco's deal with American Express had benefits for both sides. American Express was the only credit-card accepted at a store that had nearly $113 billion in sales in its most recent fiscal year; meanwhile, in exchange for that exclusivity, Costco likely negotiated a lower discount rate from the credit-card company.

Write to George Stahl at [e-mail]

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