Costco Stores in Canada to Stop Taking American Express

American Express Co.
AmEx, the most widely held card among affluent households, is sweetening perks for premier gold cards amid mounting competition. Photographer: Scott Eells/Bloomberg

Costco Wholesale Corp., the largest U.S. warehouse-club chain, will stop accepting all American Express Co. cards in Canada on Jan. 1 after a breakdown in negotiations between the two companies.

“The credit card relationship between American Express and Costco Wholesale Canada will not be renewed when it expires on Dec. 31,” Lorelle Gilpin, vice president of marketing and membership for Costco Wholesale Canada, said yesterday in an e-mail to Canadian customers.

AmEx, the biggest U.S. credit-card issuer by purchases, was the only credit card accepted at Costco stores, and has worked with the warehouse-club chain to issue co-branded cards. U.S. stores will continue to accept AmEx, with the exception of TrueEarnings and American Express Platinum Cash Rebate cards issued in Canada.

“The terms of the contract was up, AmEx and Costco entered into negotiations and were unable to come to terms,” David Barnes, a spokesman for AmEx in Canada, said in a phone interview. “This is very specific and exclusive to Canada. There are separate contracts for AmEx’s U.S. Costco relationship.”

Rewards Card

While the move doesn’t affect U.S. customers, it signals a possible rift between two companies that have worked closely together. Costco and New York-based AmEx announced in 2010 that they were teaming up to introduce a rewards card for Canadian customers. Costco has 88 stores in Canada, compared with 468 in the U.S. and Puerto Rico, according to its website. It has 107 stores in seven other countries.

The Costco relationship represented a “sizable portfolio” for AmEx in Canada, Barnes said, without elaborating.

Both companies also have ties to Berkshire Hathaway Inc., which is run by billionaire investor Warren Buffett. Berkshire is AmEx’s biggest investor and its vice chairman, Charles Munger, has sat on Costco’s board for more than 15 years. Berkshire also has a stake in Issaquah, Washington-based Costco.

Costco said in the message to customers that it would have information on new payment options soon. Jeff Elliott, a spokesman for the company, didn’t respond to a request for comment.

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