Costco said to weigh dropping American Express in U.S.

Costco Wholesale Corp., the retailer that replaced American Express Co. as its credit-card issuer in Canada, is considering a similar move with its larger U.S. portfolio, according to two people familiar with the matter.

Costco is seeking bids for both an issuer and a payments network for its U.S. cards, the people said, requesting anonymity because the matter hasn't been made public. New York- based AmEx could be among the firms bidding on the contract, the people said.

In September, Costco reached a deal with Capital One Financial Corp. and MasterCard Inc. to issue co-branded credit cards in Canada when the retailer's contract with AmEx ends this year. Issaquah, Washington-based Costco notified customers that it will stop accepting all American Express cards in Canada on Jan. 1 after negotiations between the two companies to renew the contract fell through.

American Express, the largest U.S. credit-card issuer by purchases, was the only credit card accepted at Costco stores in Canada. AmEx has a separate contract with Costco in the U.S. The retailer operates 468 stores in the U.S. and Puerto Rico, and 88 in Canada, according to its website.

Richard Galanti, Costco's chief financial officer, declined to comment, as did American Express's Elizabeth Crosta.

Seeking Partners

AmEx Chief Executive Officer Kenneth I. Chenault, 63, is seeking to broaden the firm's reach beyond affluent consumers through partnerships with merchants such as McDonald's Corp. and Wal-Mart Stores Inc. and by expanding its prepaid-card products. The lender also is working with technology companies, including Apple Inc., to provide consumers more ways to make payments using mobile phones and other digital devices.

While AmEx is poised to boost revenue for a fifth straight year, the average estimate of 21 analysts surveyed by Bloomberg is for a 2.5 percent increase, the smallest jump in that streak.

AmEx has climbed 1.9 percent this year to $92.42, lagging behind the 5.5 percent gain in the Dow Jones Industrial Average. It performed better than the index the three prior years.

JetBlue Airways Corp. also is soliciting bids to replace American Express as its credit-card partner, two people briefed on the matter said last month. That could result in a deal with a different network to process transactions, as well as a new card-issuing bank, one of the people said. AmEx may be among bidders, another person said.