Tags: Costco | Visa | Citigroup | AmEx

Costco Strikes Deal With Visa, Citigroup After Dropping AmEx

Monday, 02 Mar 2015 09:06 AM


Citigroup Inc. will replace American Express Co. as the exclusive issuer for Costco Wholesale Corp.’s credit cards in the U.S. and Puerto Rico.

Transactions will be processed by Visa Inc. beginning April 1, 2016, the Issaquah, Washington-based retailer said Monday in a statement. New York-based AmEx said Feb. 12 that it will end its exclusive U.S. partnership with Costco next year after the companies failed to reach a deal to renew it.

Losing the U.S. Costco business, which accounts for about 20 percent of AmEx’s loans and 10 percent of its cards, is among the biggest challenges AmEx Chief Executive Officer Kenneth I. Chenault has faced since he steered the company through the financial crisis. The lender also disclosed in February the end of a decade-long tie with JetBlue Airways Corp.

“Somebody was going to get the bid, and American Express learned a week or two ago that they were not the one that was going to get it,” Warren Buffett, whose Berkshire Hathaway Inc. is AmEx’s largest shareholder, said Monday in an interview on CNBC. “I don’t know the terms of the new deal, but I don’t think Citi will get rich off of it.

AmEx, whose deal with Costco in Canada ended last year, is under pressure as competition among banks and payment networks for co-brand agreements intensifies and merchants seek better terms. It’s also fighting to hang on to affluent clients, which make American Express the biggest U.S. credit-card issuer by customer purchases, and announced Feb. 26 that it will sweeten and add benefits for holders of its premier gold cards.

Visa may reap as much as $100 million, or 13 cents a share, from the Costco deal, Barclays Plc estimated before the partnership was announced.

Visa jumped 2.1 percent to $277 at 8:24 a.m. in early trading in New York.

The implementation of the agreements is subject to the purchase of the existing co-brand credit card portfolio by Citigroup, according to the statement.


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Citigroup Inc. will replace American Express Co. as the exclusive issuer for Costco Wholesale Corp.'s credit cards in the U.S. and Puerto Rico.
Costco, Visa, Citigroup, AmEx
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2015-06-02
Monday, 02 Mar 2015 09:06 AM
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