Costco Wholesale Group didn’t waste any time rebounding from the news that it would be ending its 16-year partnership with American Express. Today, Costco announced that its new partners would be Visa and Citibank.
What does this mean for customers?
Visa will be the only credit card accepted at Costco
Previously, only American Express credit cards could be used at Costco’s many warehouses. However, once the partnership changes over (starting on April 1, 2016, according to the Wall Street Journal), American Express credit cards will not be used at point of sale; only Visa credit cards will be able to be used for purchases. The huge warehouse will continue to accept both Visa and Mastercard debit cards.
Citi will offer a co-branded credit card to Costco members
Currently, American Express offers a Costco branded credit card to members. According to Forbes, Citi will purchase the existing customer portfolio, as well as offer a new co-branded card in April of next year.
Citi has similar deals in place already with companies like Hilton Worldwide Holdings and Home Depot, according to the Wall Street Journal.
Citi’s CFO, Jeff Gerspach, said at a financial services conference, “We believe that we’re positioned well to partner with Costco and take advantage of their loyal customer base.”
Will the Citi card offer the same perks as the Amex one?
Details haven’t been announced yet. The American Express Costco credit card offered users 3 percent back on gas, 2 percent on restaurants and travel, and 1 percent on everything else, according to CNN Money.
What does all this mean for American Express? The card that was once seen as synonymous with status is having a rough time. In part, this seems to be because American Express charges higher fees to merchants, which sometimes leads merchants to pass those fees on to customers or just not accept the cards at all. The Wall Street Journal reported two weeks ago that American Express was downsizing.
“AmEx announced last month that it was eliminating 4,000 jobs. The move came as part of an effort to control expenses amid a shortfall in revenue.”
Some customers have expressed that they aren’t interested in Costco’s new partnership.
— Mark R Romney (@Mark_Romney) March 3, 2015
While others seem quite pleased at the retailer’s choice.
What do you think of Costco’s new partners?
[Image by Andrew Sullivan/Getty Images]