American Express Company has announced its plans to end its US co-branding and merchant acceptance agreement with the warehouse club Costco Wholesale on 31 March 2016.
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The termination of the contract will affect AmEx’s earnings for the next two years besides impacting consumers with Costco being one of the few big merchants that exclusively take AmEx cards and does not accept Visa, MasterCard or Discover credit cards.
The move will see AmEX ceasing to issue the AmEx-Costco co-brand card and Costco not accepting the AmEX cards from the date of dissolution.
American Express chairman and CEO Kenneth Chenault said: "Taking a very disciplined approach, we began discussions on a possible renewal with Costco well in advance of the contract expiration.
"However, we were unable to reach terms that would have made economic sense for our Company and shareholders. Instead, we will focus on opportunities in other parts of our business where we see significant potential for growth and attractive returns over the moderate to long term."
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By GlobalData
