AmEx’s JetBlues

It’s the week of breakups for American Express, which announced Friday (Feb. 13) its deal with JetBlue would be ending. This comes just a day after AmEx announced it would be ending its co-branded credit card with Costco on March 31, 2016.

According to Bloomberg, JetBlue has found new card partners through a deal with MasterCard and Barclays — ending nearly a 10-year deal between the airline and AmEx. The deal hadn’t been officially announced as of last week so the source spoke on the case of anonymity. Similar to the AmEx/Costco breakup, increased competition across the co-branded card space is suspected to have been what impacted the decision with AmEx.

“Airline deals are prized by credit-card issuers because they often come with annual fees and the promise of awards for free trips can lure customers to spend more. Competition among banks and payment networks for co-brand agreements has intensified as merchants seek better terms,” the Bloomberg article detailed, which also pointed out that the credit card switch comes at a time when JetBlue is also getting a new CEO, who is expected to start this week.

As for the the news of Costco and AmEx severing their relationship, it came with bad news for the credit card company shareholders as AmEx’s stock dropped to a four-month low following the day’s announcement. American Express CEO Kenneth Chenault said that losing the contract would hurt earnings and revenues for 2015 and 2016, and there’s a chance the JetBlue change will add to the projected revenue dip.

But when it comes to retailers and co-branded bank cards, retailers may be getting the better end of the deal, according to a Reuters article that, that suggested that while co-branded cards can generate a lot of volume for issuers, they come at a high price.

“At some point, the competition here should ease,” said Michael Taiano, a research analyst covering credit cards at brokerage Burke & Quick Partners.

Though when exactly, he didn’t say.



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