Cobranded agreements come and go all the time, but I don't think we should be worried yet. Here is a collection of data points that I believe is relevant to those wanting to place bets on this particular partnership.
- In 2010 Charles Schwab cancelled a contract with FIA Card Services for the old 2% cash back card. The deal was only two years old -- launched in 2008 -- and CS paid a $20M penalty for that early termination. The Company said it was losing a lot of money in the deal because of the recession.
- FIA continued to operate the card as a straight-up 2% cash back card. Worth noting that at the time FIA (a BoA subsidiary) also operated the Fidelity 2% cash back card.
- I believe Fidelity and FIA discontinued their partnership in 2015-2016. FIA actually supported two cards -- a Visa and an Amex. When Fidelity's portfolio was picked up by Elan, Amex had been dropped.
- Also in 2015, Amex lost two significant cobranded partnerships: Costco* and JetBlue. The former being a highly coveted deal (40M Costco members nationwide).
By the end of 2015 many analysts thought Amex was in trouble after losing so many partners. My bet is that Amex had a strategy of refining its targeting: instead of competiting to retain Costco and JetBlue, they probably aimed for smaller portfolios but with higher average income.
If the deal with Schwab has already lasted 5 years, I suppose it's likely that it made sense for both parties: the recession could change this, but I think the signs point to a mutually productive relationship between the parties.
* Costco's new deal with Citi is 10 years long (from April 1, 2016), but Costco has the unilateral right to extend it by 3 years (the original agreement has already been amended several times, though none of the amendments impact the duration of the deal). For comparison, TD Bank's deal with Nordstrom is 7 years long (renewable in two year terms). TD Bank's deal with Target (originally from 2012) has been extended to 2025.
For the "Brokerage Co-Brand" Platinum cards that recently were discontinued ( Morgan Stanley? Ameriprise? Goldman Sachs? ) were those offering any redemption rate for MR through the brokerage account cash-out?
Goldman Sachs is heading in a different direction with Marcus and Apple Card, so that explains the break with AMEX Platinum.
Not sure about reasons for the other two to opt out of extending AMEX Plat co-brand.
A little more information, directly from Amex's annual K-10 filing with the SEC.
"Cobrand arrangements are entered into for a fixed period, generally ranging from five to ten years, and will terminate in accordance with their terms, including at the end of the fixed period unless extended or renewed at the option of the parties, or upon early termination as a result of an event of default or otherwise. We work with our cobrand partners on an ongoing basis to demonstrate the value we deliver and evolve our relationships for the benefit of both parties.
We regularly seek to extend or renew cobrand arrangements in advance of the end of the contract term and face the risk that existing relationships will be renegotiated with less favorable terms for us or that we may be unable to renegotiate on terms that are acceptable to us, as competition for such relationships continues to increase. We make payments to our cobrand partners, which can be significant, based primarily on the amount of Card Member spending and corresponding rewards earned on such spending and, under certain arrangements, on the number of accounts acquired and retained. The amount we pay to our cobrand partners has increased, particularly in the United States, and may continue to increase as arrangements are renegotiated due to increasingly intense competition for cobrand partners among card issuers and networks."
