Costco Wholesale Canada is switching credit card partners at the end of this year.
Capital One says it will offer a co-branded MasterCard on an exclusive basis with Costco Canada, which will end its 15-year-old relationship with American Express on Dec. 31.
"We have always believed that success comes from working with outstanding companies that share our motivation to deliver great value, loyalty and an exceptional customer experience," said Shane Holdaway, President of Capital One Canada.
"Our relationship with Costco and the new Capital One Costco MasterCard represent that philosophy perfectly and aligns with our vision to continue growing our credit card portfolio in Canada."
The Capital One Canada co-branded MasterCard will double as a Costco membership card, which the retailer requires of shoppers before they can make purchases.
Costco is known for its no-frills warehouse-type stores that require shoppers to sign up for memberships and gives them limited payment choices — primarily debit card, cash and American Express, including a co-branded card.
Costco Canada spokesman Ron Damiani said the retailer's U.S. stores have a different contract with American Express and will generally continue to accept its cards, but not the co-branded Costco Amex cards issued in Canada.
Leonard Varaksa, Amex's director of proprietary cards, said Thursday that the company has diversified its retail partners since it began working with Costco in 1999.
Amex Canada also recently added two new cash-back cards, which will be offered to its general customer base including Costco members.
"We've had strong success in both the U.K. and the U.S. with cash-back and we've seen some good data in Canada to suggest that there's a strong market for cash-back in Canada," Varaksa.
"We have a multimillion-dollar, multi-channel marketing investment behind these new cash-back cards," he said. "We built up this aggressive plan to be able to retain these Costco card members with these market-leading cards."