American Express already discontinued its credit card that was affiliated with Costco, so I guess it was only a matter of time before Costco stops accepting American Express all-together. The negotiations between American Express and Costco have broken down. In the past, American Express was the only credit card accepted at Costco. But now it seems that they will be switching to MasterCard instead.
This is probably a bigger blow to American Express than to Costco. It might actually benefit Costco because not everyone wants to have an American Express credit card. MasterCard is the big time winner in all this. This opens up a lot of new business for them. Now I am curious to see which financial institution MasterCard might team up with to provide a co-branded credit card with Costco.
As for those who are holding the American Express TrueEarnings credit card that was recently discontinued to new applicants, the credit card will be valid until December 31, 2014. This coincides with the last day that American Express will be accepted at Costco. Starting on January 1, 2015, MasterCard will be accepted at Costco across Canada.
MasterCard actually charges the retailers a lower fee than American Express. It would be interesting to see if Costco decides to pass on the savings to the consumers. Or at the very least, hold off raising the prices of their products. I am actually excited by this move, if done well, it could really benefit the consumers.