8-KMaterial AgreementsExhibits & Filings

COSTCO WHOLESALE CORP /NEW 8-K Report, Material Agreement (Mar 5, 2015)

Filed March 5, 2015For Securities:COST

Summary

Costco Wholesale Corporation announced a significant shift in its co-branded credit card program through a Material Definitive Agreement with Citibank, N.A. (Citi). Effective February 27, 2015, Citi will become the exclusive issuer of Costco's co-branded credit cards. This agreement also marks a transition in the payment network, with Visa U.S.A. Inc. set to replace American Express as the primary credit card network for Costco in the United States and Puerto Rico starting April 1, 2016. This strategic move is expected to generate revenue for Costco through royalties on cardholder spending outside of Costco warehouses, with the co-branded card also serving as a membership card. The partnership with Citi includes customer service and marketing support, underscoring a comprehensive relationship. The initial term of the agreement is ten years, with an option for a three-year extension, providing a long-term outlook for this crucial aspect of Costco's customer engagement and financial operations.

Key Highlights

  • 1Costco enters into a Co-Branded Credit Card Program Agreement with Citibank, N.A. (Citi).
  • 2Citibank will be the exclusive issuer of Costco's co-brand credit cards.
  • 3Visa U.S.A. Inc. will replace American Express as the credit card network for Costco in the US and Puerto Rico, effective April 1, 2016.
  • 4The co-branded Visa card will also function as a Costco membership card.
  • 5Costco expects to receive royalty income from cardholder spending outside of Costco warehouses.
  • 6The agreement has an initial term of ten years, with an option to extend for three years.
  • 7The transition signifies a major change in Costco's payment processing and customer loyalty programs.

Frequently Asked Questions

Costco is transitioning its co-branded credit card program to Citibank, N.A. (Citi) as the exclusive issuer and is switching its primary credit card network in the U.S. and Puerto Rico from American Express to Visa U.S.A. Inc., effective April 1, 2016.

Costco anticipates generating revenue through royalties on spending by cardholders at merchants other than Costco warehouses. Additionally, the new co-branded card will serve as a membership card, potentially enhancing customer loyalty and engagement.

The agreement with Citi was entered into on February 27, 2015. The transition to Visa as the network for U.S. and Puerto Rico transactions will occur on April 1, 2016. The Program Agreement has an initial term of ten years, with an option for Costco to extend it for an additional three years.

Citibank will also be responsible for providing customer service functions related to the co-branded credit cards and will support certain of Costco's marketing and loyalty program activities associated with the card program.