Costco Wholesale Corp. has attained a goal that retailers have sought for years: near-zero expenses for credit-card payments.

In a deal with Visa Inc. and Citigroup Inc., Costco's acceptance costs will be about zero, according to people familiar with the arrangement. That compares with the roughly 0.6 percent of each transaction the retailer pays its current partner, American Express Co. While Costco will still incur small fees on Visa cards issued by other banks, incentives from Citigroup and Visa will offset them, the people said.

The arrangement shows the pressure that Costco, the biggest U.S. retailer that accepts just one brand of card, was able to exert on financial firms seeking one of the industry's most coveted partnerships. AmEx has said Citigroup and Visa won because it wouldn't agree to the conditions and risks needed to continue its exclusive 16-year relationship with Costco, which is now set to end in March.

"The numbers didn't add up," AmEx Chief Executive Officer Kenneth I. Chenault told investors last month. "We couldn't accept their financial terms nor their contract terms, some of which would have meant taking on more risk than we were comfortable with."

Incentives are common in these types of deals and it doesn't mean Visa and Citigroup won't profit in the long-run. If customers carry loan balances on Citigroup's Visa cards, the bank will reap more interest income. The lender will also benefit when customers use those cards at places where fees are higher, and Visa will get the additional volume.

Spokesmen for Costco, Citigroup, Visa and New York-based AmEx declined to comment on the terms.

Retailers including Wal-Mart Stores Inc. have struggled for decades in negotiations, courts and Congress to cut the fees banks and networks reap when shoppers use credit cards. While merchants say those costs erode profits and drive up prices, rewards programs funded by the swipe fees, also known as interchange, are persuading more shoppers to abandon cash and checks.

AmEx's old arrangement had been lucrative, and the divorce has helped push the lender's stock down 17 percent this year as of 3:08 p.m. Friday in New York, the worst performance in the Dow Jones Industrial Average.

Costco, the world's largest wholesale club, generated more than $100 billion in sales last year and its customers account for 20 percent of AmEx's loans and 8 percent of spending. On Thursday, the lender reported first-quarter revenue that missed analysts' estimates, saying results were hurt in part by an earlier decision to cut ties with Costco in Canada.

Costco announced last month that Visa will succeed AmEx as the exclusive card network accepted at its U.S. stores. Citigroup will replace AmEx as the issuer of Costco-branded credit cards.

Visa-issuing banks other than Citigroup are trying to gauge how much revenue they might forgo when their cards are used at Costco, the people said. Visa has set the interchange rate at less than 0.4 percent, which could be too little to fully cover the cost of rewards. Still, banks might benefit from the additional loan volume and if more Costco shoppers make a habit out of using their Visa cards elsewhere.

While banks typically generate about 80 percent of their credit-card revenue from interest on balances and other fees, they rely on interchange for the rest, according to Lisa Ellis, an analyst at Sanford C. Bernstein & Co. The average interchange fee on Visa's network is about 2 percent. Most cash-back rewards cards return 1 percent to 2 percent of transactions to consumers, Ellis said.

"It's always great when you can get a relationship with a quality partner like Costco," Citigroup Chief Financial Officer John Gerspach told investors March 2. "We believe that we're positioned well then to partner with Costco and take advantage of their loyal customer base."

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