Costco To Stop Accepting American Express In 2016

It’s been rumored for months that Costco and American Express would eventually end their exclusive relationship, allowing members of the warehouse club to use other cards. Now AmEx has confirmed that the deal will indeed come to an end in early 2016.

According to the Wall Street Journal, the Costco/AmEx arrangement is slated to terminate on March 31, 2016.

“Taking a very disciplined approach, we began discussions on a possible renewal with Costco well in advance of the contract expiration,” explains AmEx CEO Kenneth Chenault in a statement. “However, we were unable to reach terms that would have made economic sense for our company and shareholders.”

Costco and AmEx have already parted ways in Canada, where the wholesaler replaced its store-branded American Express card with a Capital One MasterCard. The company has reportedly been negotiating with CapOne and MasterCard to do the same for its U.S. stores.

As we pointed out in November, while the AmEx exclusivity deal likely had kept Costco’s payment processing charges down by only having the single card network, it also severely limited the number of members who could pay with plastic.

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  1. SingleMaltGeek says:

    So, wait, they will STOP accepting AmEx, meaning they won’t take it at all, or they will no longer ONLY accept AmEx? There’s a huge difference!

  2. oomingmak says:

    Ouch! Amex’s stock is getting hammered today on this news. If the reports are to be believed Costco charges made up a full 8% of Amex’s billed business.

    It does look like they’re going to stop accepting Amex cards at Costco altogether but I agree that this and a few other reports I’ve read seem unclear.

  3. Mapache says:

    If the deal is ending, why is Costco pushing for so many card applications? What is the benefit of having that many Amex holders if they are not going to be useful in the next year?

    • MathManv2point0 says:

      Because sales staff are still probably getting extra compensation or at least evaluated by the number of people they get to sign up for the card. It may take a little time before this change trickles down to change the policy/process level for the front-line employees.

      All assumptions…

  4. wsuschmitt says:

    Here’s hoping for ApplePay and other NFC options!

  5. janetscholl says:

    Those of us who have the Costco branded Amex card also have our membership card on the back with our photos. So that means getting new cards to even shop. And our annual fee to Costco is also automatically charged to the card. This is gonna be a mess! I have not written a check anywhere other than to the government for taxes since the 1990s. I don’t even have a check in my house. And I don’t carry cash.

  6. StevenPierce says:

    The only thing worse than Amex would be Capital One.

  7. JoeBlow says:

    The transition will be interesting. I expect that if Costco is making this move, they’ve already got something in the works, and I expect that American Express will have a default card type they’ll offer to transfer the existing account to. My guess is that Costco will cut a deal with MasterCard, and that similar to the current deal with American Express it will mean that MasterCard will be the only credit card accepted (hopefully with other debit cards still accepted.) I’ll probably end up getting the next Costco card, as I do want to continue shopping at Costco, but my other card is a Visa. My big decision to make will probably be whether or not I want to keep a card with American Express.