Dive Brief:
- Costco Wholesale Corp. has formed a deal with Visa Inc. and Citigroup Inc. that would charge the retailer about zero for acceptance costs on credit-card payments, according to Bloomberg.
- Costco will still face small fees issued by other banks on Visa cards, but the new deal will offset them, according to Bloomberg.
- The retailer announced last month that it was ending its long-term partnership with American Express as the exclusive card accepted at its stores, replacing it with Visa as of March next year.
Dive Insight:
If finalized, this deal will be a huge win for Costco — the struggle between card issuers and retailers has been long-fought as retailers argue that high costs on credit-card payments issued by banks and networks cut into their bottom line and drive prices up.
While it would be a win for retailers, the lucrative nature of the deal helped give Costco so much leverage with Visa and Citigroup. After AmEx announced its upcoming split with the retailer, it reported first-quarter revenue that missed estimates and saw a dip in its stock.