Costco, the second largest retailer in the United States, has announced that it has ended its 16-year deal with American Express for credit card transactions and will work with Visa and Citigroup.
Starting on April 1, 2016, customers will no longer be able to use American Express cards and will be required to use Visa credit cards or cash. The company has not mentioned, however, whether customers with the retailer's rewards credit card will have to reapply.
Costco's decision is said to strongly impact American Express: in fiscal year 2014, the retailer accounted for eight percent of the credit card company's billed business, SF Gate reports.
The American Express cards currently used by Costco allow customers to get three percent cash back on fuel expenses, two percent on eligible travel/dining and one percent cash back on all remaining expenses.
"It makes sense from Costco's perspective to have the cashback program," Mercator Advisory Group official Ken Paterson said, the website also reports.
Costco was founded in 1976 by its original name Price Club.
