American Express deal with Costco may expire

Costco shoppers who have been limited for years to American Express credit cards may be able to pluck a new option from their wallets or purses next year after an exclusivity deal between the companies expires.

American Express said Thursday that it hasn’t been able to come to an agreement with Costco on renewal terms. The current agreement covers U.S. stores and dates back 16 years. It will end March 31, 2016.

The end of the partnership with Costco will hurt American Express earnings and revenue growth in 2015 and 2016, but company leaders said they remained confident they can reach longer-term goals. Even so, American Express shares tumbled about 6 percent after the announcement.

Costco is the world’s second-largest retailer by revenue, according to the National Retail Federation. The company posted revenue of about $8 billion last month alone.

The relationship accounted for 8 percent of American Express billed business last year, 20 percent of its worldwide loans, and 10 percent of its cards in force.

That adds up to a large loss, according to Jefferies and Co. analysts.

American Express said that Costco pays a significantly lower rate than the overall average it imposes on other retailers as part of the agreement. That arrangement gave the credit card company exclusivity for almost two decades, though Costco also accepts debit cards and cash.