Dive Brief:

• Costco Wholesale Corp. and American Express Co. are parting ways after their failure to come to terms on an agreement. As of March next year, the retailer will no longer accept American Express cards.

• The companies had maintained a partnership for 16 years that is unusual in retail: The retailer accepted only its branded AmEx card in stores. Other forms of payment have been only available to those shopping at Costco online.

• The writing may have been on the wall though; Costco ended its partnership with AmEx in its Canadian stores in September, switching to Capital One and MasterCard.

Dive Insight:

This news is terrible for American Express, considering that one of 10 Amex cards is a Costco card. The market frowned at the news, sending AmEx shares down 3%. But the change is part of a pattern for Costco to find the best value for its customers, even when its own board members take a hit on the deal. 

“At the end of the day, it’s all about saving money for our members and widening the gap between us and our competitors,” Costco spokesman Bob Nelson told Bloomberg. “If that means Pepsi over Coke, that’s what we’re going to do. If it means a different credit-card provider that’s going to be a better offering for our members, we’re going to try to do that.”