Management of Costco (COST) said its Canadian stores will stop taking American Express cards on December 31.
Management for American Express says that the contract ran out, and gave no further details. American Express was the sole credit card accepted at Costo stores in Canada, and special Costco branded cards were issued to many customers. Costco management said it will soon announce new payment options.
The American Express relationship with Costco in the U.S. is largely unchanged, except for TrueEarnings and the American Express Premium Cash Rebate Cards issued in Canada. David Barnes, spokesman for American in Express in Canada said, “AmEx and Costco in Canada were unable to come to terms. This is very specific and exclusive to Canada. There are separate contracts for AmEx’s U.S. Costco relationship.”
If Barnes is right, and this really is Canada-specific and doesn’t signal larger issues in the relationship between Costco and American Express in the U.S, it is unlikely to have a strong negative impact on both companies, since Costco’s locations in Canada are at a mere 88 compared to 468 stores in the U.S. and Puerto Rico. American Express’ largest investor is Warren Buffett, and Charles Munger of Berkshire Hathaway has been on Costco’s board for 15 years.