ISSAQUAH, Wash.—Costco has announced that it will enter into a new co-brand credit card program with Citi, with Visa replacing American Express as the card network.
Costco previously stated that it was ending its exclusive relationship with American Express in the retailer’s United States stores on March 31, 2016.
In order for the deal to be official, Citi must buy Costco's co-branded card portfolio. If that takes place, then Citi's agreement will go into effect the day after the American Express contract ends—April 1, 2016, explained Bill Hardekopf, CEO of LowCards.com, Birmingham, Ala. “This will impact cards for stores in the United States and Puerto Rico.”
American Express and Costco had a relationship that dated back 16 years. AmEx said the loss will hurt the company's profits for the next two years, said Hardekopf. “It has also been reported that American Express will lose its partnership with JetBlue at the end of the year.”
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, the company stated in a release.
Costco currently operates a total of 474 stores in the U.S., with an additional 88 in Canada. The new deal will not affect the Canadian stores, but it should have a big impact on Citi and Visa's revenue stream, added Hardekopf.