Fidelity Investments announced to end a 12-year cash-back credit-card partnership with American Express Co. (NYSE:AXP) and Bank of America Corp. (NYSE:BAC) on Monday, which had generated billion of dollars in fees for Fidelity.
Ram Subramaniam, president of Fidelity’s retail brokerage business, said that the company would build new partnerships with Visa Inc. (NYSE:V) and U.S. Bancorp (NYSE:USB), which are more closely aligned with Fidelity.
Fidelity offered 2 percent cash back for cardholders of American Express and Bank of America since 2003 and the company said the new card would still offered 2 percent cash back for every $1 the cardholders spend.
This is another bad news for American Express. Because Costco Wholesale Corp. had also announced to end the credit-card partnership with American Express nearly a year ago and switched partners for Visa and Citigroup Inc. But American Express said that the Fidelity credit-card business only represents less than 1 percent of the company’s total billings.
The termination of partnership may not have a big impact on Bank of American. A spokeswoman from Bank of American said that it was a mutual decision for the two companies.
"Over the past several years, Bank of America has been exiting from our financial institutions card business where Bank of America has limited opportunity to deepen customer relationships, and this move is consistent with that strategy," according to an e-mail statement from Riess.
Fidelity said that Visa cards had a larger customers base and they could be used for the Apply pay, Samsung Pay and Android pay.