Costco Stores in Canada to Stop Taking American Express

[tomm2thumbs]

Source: Bloomberg

Costco Wholesale Corp. (COST), the largest U.S. warehouse-club chain, will stop accepting all American Express Co. (AXP) 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.

Read more: http://www.bloomberg.com/news/2014-09-18/costco-stores-in-canada-to-stop-taking-american-express.html

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Wondering if this is the first domino in a chain reaction that could spread to the United States, despite assurances that the Canadian and US arrangements differ.

[tomm2thumbs]

1. if you want to scare your favorite Costco Amex shopper...

send them this link.... they don't mention 'Canada' in the story!

http://smartcanucks.ca/costco-to-stop-accepting-american-express-december-31st/

* that's the first one I saw but did more checking and found out it was just in Canada, for now.

[Lakerstan]

2. Here is what is happening

http://www.bloomberg.com/news/2014-09-18/capital-one-said-to-replace-amex-as-costco-canada-issuer.html

[quadrature]

3. back in the day, AMEX were known as thieves

for their merchant use fee.

not sure about today

[BumRushDaShow]

4. ^^THIS^^

There was a big purge of Amex acceptance by vendors because of that. Apparently Amex relented and changed their fee structure and seems most places I have run across accept it again.

Sounds like they are going to try again....

[Recursion]

7. Amex has a totally different business model from other cards

I don't know anything about the ethics involved, but they make money on the "other end", through membership fees and vendor fees, rather than interest payments. Actually Costco does the same thing in that they sell their products at a slight loss and make their money on the memberships...

[thesquanderer]

9. Costco does not sell things at a loss

but their markup is lower than other stores... from what I've read, 8 to 14%, maybe 15% for their own kirkland brand. But yes, that is well subsidized by the memberships, which I read accounts for 80% of their total profit.

But you're right about AMEX. In fact, until somewhat recently, their cards were only pay-in-full, customers could not carry balances on AMEX cards. So yes, it was a different business model from MC/Visa/Discover. All these companies charged fees to the seller, but MC/Visa/Discover also made lots of money on interest charges to the consumer which meant they were happy to offer lower fees to the seller compared to AMEX. Since Amex did not have the revenue stream of consumer interest, their only revenue was from the seller side, and so they always charged the vendors more than MC/Visa/Discover did, which is why so many sellers preferred not to take them.

[Kelvin Mace]

15. Well, its complicated

Back in the day, Amex's profits came from membership fees they charged cardholders and the higher fees they charged merchants. Amex was a "prestige" card doled out to business and high income folk. As a merchant you paid more in fees to accept Amex because Amex holders spent more money.

All that changed as Amex created new cards and new tiers. A green Amex is pretty much available to anyone, and it now has a whole line of rewards type cards available to the masses and they are letting you run a tab. Thus, merchants began to question why they were paying 1%-1.5% more than the other cards when Amex holders no longer were that desirable.

[Recursion]

17. And here is the fallout of that

The chargebacks from Mastercard were once upon a time legendary, but Amex and MC have basically met in the middle now.

[sakabatou]

5. The place where I used to work took only Visa or Mastercard

nothing else.

[secondwind]

6. In the Dominican Republic, Amex was charging up to 2% in fees..... they settled under a

lawsuit several years ago, and I received a check for $60 under that settlement.

I have stopped carrying an Amex card, I don't think vendors like it all that much anymore..

[Paulie]

8. The only reason I keep an AMEX card is for Costco

I use it everywhere because I happen to have it for Cosco cash back.

[old guy]

10. Same here.

[Nedsdag]

14. Me too!

n/t

[freshwest]

19. Me three!

[mainer]

11. I love my Amex Card. Capital One is the pits.

I have never had a card that offered better customer service than AmEx. Whether overseas or at home, they are quick to assist on the phone, whatever my issues. And my charges were never denied by them. Plus, their card has a chip, which is easier to use overseas.

Capital One, on the other hand, was horrible to deal with when I lost my card in England. They wouldn't let me cancel the account, and forced me to go through stupid hoops over the phone, on a long-distance, non-toll-free international call. Then, when I got home, they sent me another card. I've never used it.

[winstars]

13. We call it Crap One at some credit repair boards I frequent....

Although their are other cards that are worse....

http://www.creditboards.com

Tons of info...

[freshwest]

20. I've never had any trouble with AE either. Years ago a Capitol One application ended up causing

me a case of ID theft that was over $30,000. The card never came, but a post office box holder in the city it was mailed to was the source of the theft.

I say it was my mailing the information in the application to them that caused it, as it was the only credit application I'd made in ten years. A disgruntled employee or a regular scammer, IDK.

I only found out about it attempting to buy a car on credit. Five years later the unpaid non-collateral credit balances, six loans for $5K, not one payment made, were in my credit record with all agencies.

I got that straightened up, but those debts still pop up at times. So someone got $30K and I got bad credit. I was fortunate, some have had much worse things happen with ID theft.

Their unsolicited application came in the mail. I'd never responded to solicitations for credit of any kind, it was just a spur of the moment thing after seeing their television advertisements.

If I need to buy something on time, I'll contact a lender.

[GliderGuider]

12. Bummer. I joined Costco recently, and got their co-branded Amex just for purchases there.

I'm not happy with the idea of a switch to Capital One. Maybe I'll just go back to using cash...

[uppityperson]

16. I use my Visa associated bank debit card at Costco. They have no problem with those debit cards.

But they only take AmExp for credit cards. Is this article talking about the credit cards you get through Costco?

[adigal]

18. When I had stores, I never minded taking AMEX - the purchases were bigger

Seems like the wealthier still use AMEX. PAy in full. No interest.

[Aristus]

21. CostCo: Now accepting 'Canadian Express'.

"Doan't leave hoame withoot it. But if you do, go hoame 'n' get it; we'll hoald yer stuff fer ya, eh?"

[ManiacJoe]

22. This is not the first time Costco has swapped credit cards.

Prior to AmEx they only took Discover Card. Now they are moving to MasterCard.