Costco turns down Amex for Visa, Citi card partnership

Costco has entered into a new long-term co-brand credit card program agreement with Citigroup and a co-brand incentive agreement with Visa, nasdaq.com reports. The company noted that the implementation of these agreements is subject to the purchase of the existing co-brand credit card portfolio by Citigroup.

Under the terms of the agreements, Citigroup, a global issuer of consumer credit cards, will become the issuer of Costcos co-brand credit cards. Meanwhile, Visa will replace American Express as the credit card network for Costco in the US and Puerto Rico beginning April 1, 2016.

Once issued, Costcos co-brand Visa credit card would provide rewards to Costco members and serve as the Costco membership card. In mid-February 2015, American Express said it will not renew its US co-branding and merchant acceptance agreements with Costco, that are set to expire on March 31, 2016. The move comes after media reports emerged that Costco had started talks with other credit card companies in late 2014.

Amex cards were the only ones to be accepted at Costcos US stores. Costco is said to have likely got a highly negotiated service charge rate from Amex in exchange for the exclusivity. However, Costco had ended its exclusivity deal with Amex in Canada in 2014, and replaced it by striking deals with two credit card operators, MasterCard and Capital One Financial.