American Express's (AXP) - Get Report breakup with Fidelity Investments, the third branded-card client to leave in less than a year, signals heightened competition in the massive market as rewards for both borrowers and lenders fizzle.

Fidelity, a retail brokerage and retirement-savings provider, said Monday it would begin offering Visa (V) - Get Reportrewards cards issued by U.S. Bank (USB) - Get Report to its 24 million customers, replacing rewards cards issued by Charlotte, N.C.-based Bank of America (BAC) - Get Report that had used the American Express and Mastercard (MA) - Get Report payment networks.

The deal marks another loss, albeit a small one, for New York-based American Express, the 165-year-old giant that issues cards and operates its own payment network. The Fidelity portfolio accounts for less than 1% of the company's billings, said Marina Norville, a spokeswoman. In 2015, the company said it was ending branded-card deals with Costco (COST) - Get Report , which made up 20% of its card-member loan portfolio, as well as New York-based airline JetBlue (JBLU) - Get Report .

"The co-brand credit card market moved into the spotlight in 2015 with Amex's loss of the Costco partnership," Nomura analyst Bill Carcache said in a note, "and it remained in focus throughout the rest of the year as a number of high-profile renewals made it clear that issuer economics were getting squeezed."

Despite its massive size, accounting for roughly 50% of card spending, the branded-card market is becoming "incrementally less lucrative" for card-issuers, Carcache said in the report, co-authored by Steven Chubak. JPMorgan Chase (JPM) - Get Report , for instance, said fee income lost when it renewed contracts with airlines United (UAL) - Get Report and Southwest (LUV) - Get Report , would cost it $800 million, while American Express indicated that renewals with both Starwood (HOT) hotels and Delta Air Lines (DAL) - Get Report would pressure earnings, Carcache said.

Consumers are getting squeezed, too. Card users "who were steadfast in saving their points for travel were disappointed to find that it took more points in 2015 versus 2013 to get the same airplane ticket -- with American (AA) - Get Report , Delta and United -- or hotel room, with Hilton (HLT) - Get Report , Starwood and Marriott (MAR) - Get Report ," Carcache wrote.

The average rewards yield for airline card spending was about 0.9% in 2015, down from about 1.3% in 2013, according to Nomura's analysis of 32 branded rewards cards. For hotel cards, the yield dropped to about 1.8% from 2% in 2013, Carcache said.

The Fidelity cards, widely noted for some of the best rewards available, offer points on each dollar spent that can be applied to gift cards, merchandise and travel or converted into cash -- if deposited into a Fidelity account.

Customers using Fidelity's 2% cash-back credit cards have netted more than $1 billion in cash rewards since 2003, Ram Subramaniam, president of Fidelity's retail brokerage business, said in a statement, proving that "the opportunity to use everyday spending to help bolster contributions for longer-term savings and investment goals is too good to ignore."

Under the new agreement, Minneapolis-based U.S. Bank will buy Fidelity's $1.6 billion branded-card portfolio from Bank of America, said Dana Ripley, a spokesman for U.S. Bank.

The decision not to renew the Fidelity deal was a mutual one, said Betty Reiss, a spokeswoman for Bank of America. 

"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," she said in an e-mailed statement. "This move is consistent with that strategy."