Citigroup Inc. will replace American Express Co. as the exclusive issuer for Costco Wholesale Corp.’s credit cards in the U.S. and Puerto Rico.

Transactions will be processed by Visa Inc. beginning April 1, 2016, the Issaquah, Washington-based retailer said Monday in a statement. New York-based AmEx said Feb. 12 that it will end its exclusive U.S. partnership with Costco next year after the companies failed to reach a deal to renew it.

Losing the U.S. Costco business, which accounts for about 20 percent of AmEx’s loans and 10 percent of its cards, is among the biggest challenges AmEx Chief Executive Officer Kenneth I. Chenault has faced since he steered the company through the financial crisis. The lender also disclosed in February the end of a decade-long tie with JetBlue Airways Corp.

“Somebody was going to get the bid, and American Express learned a week or two ago that they were not the one that was going to get it,” Warren Buffett, whose Berkshire Hathaway Inc. is AmEx’s largest shareholder, said Monday in an interview on CNBC. “I don’t know the terms of the new deal, but I don’t think Citi will get rich off of it."

AmEx, whose deal with Costco in Canada ended last year, is under pressure as competition among banks and payment networks for co-brand agreements intensifies and merchants seek better terms. It’s also fighting to hang on to affluent clients, which make American Express the biggest U.S. credit-card issuer by customer purchases, and announced Feb. 26 that it will sweeten and add benefits for holders of its premier gold cards.

?Visa may reap as much as $100 million, or 13 cents a share, from the Costco deal, Barclays Plc estimated before the partnership was announced.

Eoin Treacy's view

Cash is becoming an outmoded medium of exchange as purchases move increasingly online. This is creating additional competition in the payments sector. Costco’s business is not so important from a profit perspective considering the firm’s deserved reputation for thrift. However where it is desirable is from the perspective of where else a customer might use the card. 

Costco is somewhat overextended relative to the 200-day MA at present but a sustained move below the trend mean would be required to question the broad consistency of the medium-term uptrend. 

Visa extended its uptrend today and while increasingly overextended in the short term, a sustained move below the $24.50 would be required to question the consistency of the overall advance. 

American Express continues to firm in the region of the lower side of the yearlong range but will need to hold the $78 area if potential for additional higher to lateral ranging is to be given the benefit of the doubt.