The mutual fund company ended its 12-year relationship with American Express and Bank of America, replacing them with Visa and U.S. Bancorp. Fred Katayama reports.
Another setback for American Express. Fidelity is dumping it and Bank of America, replacing it with Visa branded credit cards. That ends a 12-year partnership with Amex and B of A. Beginning Monday, Fidelity will supply its customers with Visa cards by partnering with U.S. Bancorp and Visa. Among the reasons a Fidelity spokesman cited for the change: technology and the global acceptance of Visa. Its new cards will feature chip security technology. Last February, Costco dropped American Express, replacing it with Visa credit cards issued by Citigroup, causing AmEx shares to drop more than 6 percent. AmEx has said that would cut into its profit for two years. One of the worst performing Dow stocks last year with a 25 percent loss, AmEx shares fell further in early trading amid a global market selloff. Bank of America and Visa also slid, but U.S. Bancorp shares gained ground. An American Express spokesperson said the Fidelity portfolio accounts for less than 1 percent of its billings. Janney Montgomery Scott analyst Sameer Gokhale said, "It's unlikely to be a very material part of earnings overall for American Express, but it is a continuation of a negative trend we've seen as far as co-branded partnerships for AmEx." With the new card, Fidelity customers will continue to earn 2 percent cash back for every dollar spent and pay no annual fee.