American Express lost 10% of its card business when they lost the Costco deal. Here’s an inside account of how American Express lost the business. As costly as it was for American Express to lose Costco, it would have been more costly to retain Costco.
Details of the new Citibank Costco card were leaked in a regulatory filing, and we learned early that it was basically the same product offer as the American Express Costco card — only a Visa rather than an American Express.
Costco’s switch to Visa though was delayed. This is a complicated transition for the merchant and for the banks, especially with Citibank picking up American Express’ “back book” (Citibank bought the existing card accounts from Amex).
Now we have a timeline, and what happens next. Via Wallaby Financial,
- American Express will continue to be accepted at Costco through June 19
- Starting June 20, Costco will accept only Visa, cash, checks, debit cards, and Costco cash cards
- Amex Costco cards will stop working June 20.
- Cardholders will automatically receive their new Citibank Costco Visa. No application is needed, no hard credit pull will occur.
- Cardholders will retain the same credit line, and new cards will be shipped in May or early June.
- Cash back earned on the Amex Costco through June 19 “will automatically transfer to the new credit card from Citibank”
The new Citibank-issued Costco card will be available to new signups mid- this week, two months before existing Costco Amex cardholders get their hands on it. The application should be available at citi.com/WelcomeCostco.