New York – Warehouse club retailer Costco Wholesale Corp will stop accepting American Express Co’s credit cards at U.S. stores from next year, threatening nearly 8 percent of the card company’s worldwide billed business.
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AmEx, which had worldwide billed business of about $1 trillion in 2014, said the loss of the contract would hurt earnings for the next two years. The company’s shares fell as much 7 percent in early trading on Thursday.
“…This represents a large loss in our opinion,” Jefferies analysts said in a report, noting that Costco also accounts for 20 percent of AmEx’s worldwide loans and 10 percent of cards in force.
Costco declined to comment on the move, which follows its decision to drop AmEx in Canada last year.
Capital One Financial Corp
Capital One, whose shares were up 2.3 percent, did not immediately respond to a request for comment.
Competition in the co-branded card business has intensified in recent years, leading to higher renewal costs, American Express CEO Kenneth Chenault said on a conference call.
The exclusive agreement between AmEx and Costco is set to end after 16 years on March 31 next year.
Costco has 468 warehouses in the United States and Puerto Rico, catering to relatively higher-income customers than Wal-Mart Stores Inc
The company, which sells everything from jewelry to fresh produce at its cavernous members-only stores, reported revenue of $112.64 billion for its fiscal year ended Aug. 31, 2014.
AmEx shares were down 6 percent at $80.75 in late morning trading on the New York Stock Exchange
My Link card is still ok?
so it’s becoming a cash business .
they only except Amex , debit cards and cash.
A crash for stores who buy to resell ,they r going too lose out on points from Amex.
what a huge loss for Amex.
Interesting, I was in the store yesterday and at the entrance there was someone trying to get customers to sign up for the Costco/Amex card
Re# 2, I worked at amex when they brought in Chenault. He was an up and coming star in the business world & they pursued him from his other job, a move that was considered brilliant at the time, and he hasn’t disappointed. I realize you’re just kidding, but I thought I’d point it out.
Serves them right. I am an american express card member for 40 years. I was never late with a payment. I used aproximatly $180.000.00 to 200.000.00 a mounth. They decited to cut my credit to $70.000.00 with out even notifying me. That resulted that when my wife did Shabbos shoping in flatbush she was declined. It was quit embersing. I was declined at a high end resturant. This was the last time that i will use american express again..