This is not a travel article but rather one of those things that interest me that overlaps with the my blogging topics. I am not a Costco shopper but I have seen articles about the upcoming switch by the retailer from accepting Amex cards to Visa cards. What drew my attention to the Bloomberg Businessweek article on the difficulties Amex is facing was the subtitle: "As Costco cuts ties, Amex struggles to hang on."
My initial reaction was that losing one retailer would not harm a financial services goliath like American Express. After reading the article, while I still am not sure things are as dire as the article makes out, I was surprised at several aspects of American Express's business. Costco-branded Amex cards accounted for "10 percent of the 112 million Amex cards," and, per Costco's new card agreement, Amex must sell the portfolio to Citigroup. Though the company will attempt to convert cardholders to standard Amex products, assuming many cardholders are more loyal to Costco than Amex, there is a sizable amount of business that could walk out the door next year. (Amex did announce last month that Costco's archrival, Sam's Club, would begin accepting Amex cards October 1, but that deal is not exclusive.) More surprising is the degree to which Amex is reliant on co-branded cards:
The article did touch on the Centurion Lounges that are the darling of so many points and mile bloggers. The article makes the valid point that Amex likely would prefer not to be in the business of operating airport lounges but, since many lounges no longer admit Platinum cardholders, American Express had to respond to maintain the level of perks customers demand for their $450 annual fee.
If you are one of those points and miles folks that are interested in the underlying business behind that pile of credit cards you have accumulated, the Bloomberg Businessweek article is a must read.