Costco Credit Card Processing

Costco Credit Card Processing
  • Editor Rating

  • Rated 3.5 stars
  • Very Good

  • Costco Credit Card Processing
  • Reviewed by:
  • Published on:
  • Last modified: August 18, 2015
  • Disclaimer

Review Summary:

Costco Merchant Services misses the top marks in our reviews due to their outsourcing to Elavon as well as costly cancellation costs and other fees that many merchants are unaware of until it is too late.

Costco Credit Card Processing
  • Costco Credit Card Processing
  • Rating: 3.5
  • Reviewed by:
  • Published on: February 25, 2015
  • Last modified: August 18, 2015

Review Summary:

Costco Merchant Services misses the top marks in our reviews due to their outsourcing to Elavon as well as costly cancellation costs and other fees that many merchants are unaware of until it is too late.

View our Top Ranked Processor

Costco is a membership warehouse club that offers quality brand-name merchandise at competitive prices. The company’s first store, named Price Club, was opened in 1976 in San Diego. Though the store originally catered exclusively to small businesses, executives soon realized that a strong market for non-business owners existed. Sales only increased as the years progressed, and when Costco and Price Club merged in 1993, they were generating about $16 billion in annual sales.

In addition to being a membership warehouse, Costco offers merchant services and credit card processing through its partnership with Elavon. This partnership has allowed Costco to expand its services to merchants, coupling low Costco prices with secure Elavon transactions. As such it is important to know that when using Costco for payment processing, customers will actually be processing with Elavon.

Similar to why individuals become members with Costco in the first place, the idea behind processing with Costco is that their deal with Elavon can ensure that the businesses receive better pricing than they would on their own. Costco has worked with Elavon so that Costco members receive “better” pricing than they would expect to see if they were to contact Elavon directly. However unlike when you are shopping for supplies or electronics or other commodities, due to the nature of how processing fees are set up the discount that merchants who work through Costco receive, can be accessed by negotiating and paying attention to the details when working with many of the merchant service providers we have reviewed. As such we do not feel that individuals who work through Costco will see real savings over some of their competitors, despite the discount they receive as a member of Costco.

Additionally one consistent concern that we have with the way that the relationship between Elavon and Costco has been constructed is that it appears very clear that in return for providing Costco merchants with a discount (compared to typical Elavon pricing structure), businesses that sign up through Costco are signing contracts that carry with them extensive cancellation fees. The Costco’s membership brochure does not mention any such fee, however it is consistently mentioned by individuals online that have attempted to cancel or switch their account to another provider. We highly recommend that merchants inquire about it and take a detailed look at their contracts before agreeing or signing anything.

Before You Sign A Contract!

We recommend that all merchants speak with at least 2 processors before signing their contract. Why?…

First – You should feel comfortable with the sales representative, if you’re feeling pressure on the call or feel as though you are not a focus, it’s unlikely your experience will improve after signing your contract!

Second – Be wary of introductory rates (specifically qualified rates) in the initial pitch – each business is unique and the rates/fees that will actually save your business the most, are only available once the sales representative has learned about your business.

We currently have Cayan listed as our top ranked merchant service provider. However if they do not fit your needs, you can look through our full list of processors and find the one that is right for your business here.

Another issue surrounding Costco’s credit card processing services is in the fine print on qualified vs mid/non-qualified transactions. From what we have seen members can expect a monthly minimum charge to their accounts when qualified transaction fees and per-item charges are less than $20 per month. Also it appears that qualified transactions include only standard, swiped VISA/MasterCard payments. This means rewards cards and business credit cards are excluded from qualified transactions. Unfortunately, standard VISA/MasterCard credit cards usually make up only a small percentage of most merchants’ transactions. If you choose to work with Costco/Elavon for your processing, be sure to review monthly minimums as well as the types of cards/transactions your business will actually be seeing and how this will actually impact what you pay each month (this is a practice we encourage across all providers but emphasis it here based on what we have seen/heard from other merchants).

Monthly fees and membership fees are paid to Costco, but when a problem with merchants’ accounts occurs, they must contact Elavon to resolve the issue. Costco maintains its commitment to competitive prices when it comes to merchant account services. Admittedly, merchants risk being charged a monthly minimum fee for qualified transactions that are less than $20; however, if the majority of their transactions exceed this minimum requirement, Costco’s rates are quite impressive. In addition to credit card processing, Costco’s merchant services also offer electronic processing for Discover cards, American Express cards, and debit cards, and if merchants experience a problem with any of their services, they need only call the customer service department, which keeps hours that are merchant friendly. Though setting up a merchant account with Costco and allowing Elavon to process all payments may seem counter intuitive, the companies keep everything simple.

Elavon has consolidated the payment processing service; the company takes care of all processing, settlement, and support services for many major credit cards, including VISA/MasterCard, American Express, Discover Network, and JCB. Once again, Costco’s low price commitment is available to merchants who take advantage of the Executive Membership; their application fee and monthly statement fee will be waived.Costco’s partnership with Elavon has changed the face of merchant services accounts. Merchants can now use their Costco membership to their benefit, having access to the company’s competitive prices and quality products while taking advantage of the low cost services Elavon provides.

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SMB Reviews
SMB Reviews 473 posts

SMBReviews is committed to providing small and mid-sized business owners with the information and resources they need to select the best service or product for their company.

Editor review

Costs
3.5/5
Sales
3.5/5
Customer Service
3/5
Ratings
3.5/5

3.4

Average
3.4
Summary

Costco Merchant services missing the top marks in our reviews due to their outsourcing to Elavon as well as costly cancellation costs and other fees that many merchants are unaware of until it is too late.

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