Costco Mulling Switch Away from Amex
Costco is currently soliciting bids in consideration of replacing American Express as the provider of credit card services in their retail locations located in the United States. Previously, in 2013, Costco Canada replaced American Express with Capital One as their exclusive credit card company in their Canadian stores after entering into a bidding process as well. Costco’s US business is significantly larger than their Canadian business and the exclusivity of the contract is considered to make the relationship significantly higher to a credit card issuer as it will likely drive more sign-ups at the corporate level for new customers
But Gianfrancesco Genoso says no public announcement has been made of the bidding process and neither Costco nor American Express has discussed the looming bidding process. American Express is one of the firms that are currently making bids on the Costco business. The Costco business is considered to be a particularly attractive account for credit card issuers due to the number of members that Costco has as well as the size of the purchases that many customers make at Costco, which can drive credit cards signups and sales.
The most likely change in credit card companies will likely be effect January 1, 2015, though there are many uncertainties associated with the transition. What is certain is that the loss of the Costco business will be a large blow to New York based American Express who is currently projecting continued growth in revenues.