Effective April 1, 2016, Costco Wholesale Corp (COST – Analyst Report) will start accepting Visa (V – Analyst Report) instead of American Express (AXP – Analyst Report) at its U.S. locations. Right now, the wholesale club retailer only accepts debit cards and Amex credit cards for in-store purchases and purchases made at its gas stations. However, Visa and MasterCard (MA – Analyst Report) are accepted for online purchases.
The agreement between Costco and Amex ended due to a failure from both parties to reach terms of renewal; Amex has been Costco’s exclusive credit card partner since 1999.
According to the new deal, Visa will be the only credit card accepted for in-store and gas station purchases. The benefits of the new card will be made available to members soon. For comparison’s sake, the Costco Amex offered members no annual fee, 3% cash back on gas, 2% for restaurants and travel, and 1% back on everything else.
“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,” Costco said.
The deal hinges on Citi (C), the world’s largest issuer of consumer credit cards, buying the company’s co-branded credit card portfolio, Costco said.
Costco is one of the five largest retailers by revenue and has 474 locations in the United States and 88 locations in Canada.
Shares of Costco ended the day Monday up 0.67% at $147.94. Visa shares were up 2.57% on the day and closed at $278.29.
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