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 george.stahl@wsj.com
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