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Costco Merchant Services Review: Fees, Complaints, & Lawsuits

  • January 30, 2022
  • By Payments Industry Analyst, Phillip Parker
  • 7 User Reviews
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Rating

 3/5
Costco Logo
Website
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(877) 240-3317

Most Recent Comment

  • Leslie chin: says:
    May 11, 2021
    "Poor quality machines, poor customer service. Took 3 days to resolve a sim card issue. receipt print tiny, machine battery don't last a day. ..." Read More
See All User Comments

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Rating:
 3/5

Agree with our rating?

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View Pricing
(877) 240-3317

Most Recent Comment

  • Leslie chin: says:
    May 11, 2021
    "Poor quality machines, poor customer service. Took 3 days to resolve a sim card issue. receipt print tiny, machine battery don't last a day. ..." Read More
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An Elavon Reseller

Costco Merchant Services is the merchant services division of Costco, a well-known wholesale retailer. Costco Merchant Services is actually a reseller of Elavon contracts, and this relationship was indicated clearly on the department’s former website. Elavon is part of U.S. Bank’s (U.S. Bancorp’s) payment services division. This means that businesses that sign up for a merchant account through Costco will receive the processing services of Elavon.

Costco Merchant Services Payment Processing

Costco Merchant Services processes all major debit and credit cards for most business types. Their services include POS systems, EMV card readers and swipers, mobile processing, and online processing solutions.

Costco Location & Ownership

Founded in 1976, Costco’s headquarters are located at 999 Lake Dr. Ste 200, Issaquah, Washington 98027-8982. W. Craig Jelinek is the president and CEO of Costco.

Costco Merchant Services Review

  • Costs & Contract: Costco Merchant Services offers a three-year contract through Elavon with no early termination fee.
  • Complaints & Service: Costco Merchant Services has received more than 10 public complaints.
  • BBB Rating: Costco Merchant Services does not have a profile with the Better Business Bureau at this time.
  • Sales & Marketing: Costco Merchant Services does not appear to hire independent sales agents and has received a low number of complaints about its sales practices.
Costco Merchant Services payment processing
Costco Merchant Services offers payment processing through the massive Costco brand

Should You Trust Costco Merchant Services?

Lawsuits, Reviews & Complaints

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Complaint Summary

Total Online Complaints 10+
Live Customer Support Yes
Most Common Complaint Hidden Fees

Low Complaint Volume

We only are able to locate around 10 Costco Merchant Services reviews publicly filed on this and other consumer protection sites. Older complaints mention poor rates, difficulty canceling the service, and an undisclosed early termination fee, while newer complaints describe fund-holds, expensive equipment leases, and difficulty replacing a stolen terminal. Many of the available complaints have been posted on our Elavon review rather than this review. It is important to note that because Costco’s Merchant Services department falls under the organizational umbrella of Costco but resells the service of Elavon, it is very likely that many merchant complaints get split between the customer service departments and online profiles of these other two entities.

Costco Merchant Services Lawsuits and Fines

We have not found any outstanding class-action lawsuits or FTC complaints filed against Costco Merchant Services. Dissatisfied merchants who wish to pursue a non-litigious course of action against the company should consider reporting it to the relevant supervisory organizations.

Costco Merchant Services Customer Service Channels

Given Elavon’s average track record with complaints and the sheer size of Costco, it’s difficult to chart whether merchants are complaining about Costco’s Merchant Services. Overall, though, merchants do not appear to accuse Costco Merchant Services of being a scam or ripoff. Costco Merchant Service’s support lines are staffed by Elavon, which provides 24/7 customer support to merchants.

We have located multiple Costco Merchant Services customer service phone numbers:

(877) 807-6239 – Toll-Free Customer Support
(877) 240-3317 – Sales

We have assigned the company a “B” in this section but do not consider it to be a top payment processor for customer service.

Is the BBB Rating for Costco Merchant Services Accurate?

Better Business Bureau Profile

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The Better Business Bureau does not have a page devoted specifically to Costco Merchant Services, and Costco itself has had its complaints distributed across multiple profiles for its individual locations. In addition, it’s possible that some Costco Merchant Services complaints could be redirected to Elavon’s BBB profile. It would therefore be unhelpful to consult the BBB for information about Costco’s Merchant Services, and we will not factor the BBB into this review.

How Expensive is Costco Merchant Services?

Rates, Fees, and Contract Terms

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Cost Summary

Swiped Rate 1.22% + $0.12- 3.35% + $0.29
Keyed-in Rate 1.99% + $0.25
Virtual Terminal Rate 1.99% + $0.25
Payment Gateway Fee Undisclosed
Early Termination Fee None
PCI Compliance Fee None
Application Fee $25
Monthly Statement Fee $4.95
Equipment Lease Terms 48 Month (locked)

Three-Year Term

As noted above, Costco resells Elavon contracts, which suggests that Costco’s standard contract terms likely resemble the standard Elavon contract. Though Costco advertises rates as low as 1.22% plus $0.12, merchant reviews report fees as high as 3.35% plus $0.29. These terms appear to include a three-year agreement with tiered pricing, a $25 application fee, a monthly minimum fee of $20, and a monthly statement fee of $4.95. To its credit, the company does not charge any early termination fees or PCI compliance fees. Costco also waives its application and statement fees for Executive members.

Virtual Terminal and Payment Gateway Pricing

In addition to its storefront payment processing services, Costco also dedicated a portion of its website to advertising its virtual terminal and payment gateway services. The company discloses that its keyed-in rate of 1.99% plus $0.25 applies to online transactions. It is unclear where additional fees, including gateway fees, technical support fees, or batch fees apply to these e-commerce services.

Purchase Instead of Leasing Equipment

Processing equipment is available for upfront purchase on the company’s website, but Costco may also lease equipment through Ladco Leasing, a poorly rated leasing provider on CardPaymentOptions.com. All told, Costco’s involvement doesn’t appear to add or subtract much from the usual services offered by Elavon. These factors compel us to award Costco a “B” in this category, but merchants are encouraged to compare the company’s pricing to the cheapest merchant account providers. We also encourage merchants to check out our list of the providers of the best merchant accounts.

Does Costco Merchant Services Use Deceptive Marketing?

Advertising & Sales Strategy

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Key Points

Employs Independent Resellers No
Advertises Deceptive Rates Yes
Discloses All Important Terms No

Direct Advertising to Shoppers

Costco appears to market its merchant services using the same channels that it uses to market its other products, including mailed, online, and in-store promotions. The company’s large membership base allows it to advertise directly to its regular shoppers, sparing it the need to employ independent sales agents like its processor, Elavon. This compares favorably to our list of best credit card processors.

Slightly Deceptive Rate Quoting

The Costco Merchant Services former website prominently quoted two rates of 1.22% plus $0.12 and 1.99% plus $0.25 per transaction. These rates are the “Qualified” rates for swiped and keyed transactions. The fine print beneath these quotes noted that these are the rates for Qualified transactions, but did not state that rewards cards (which receive “Mid-Qualified” and “Non-Qualified” rates) will process at a higher rate, nor did it list these higher rates. We consider this type of rate quoting to be somewhat deceptive, since merchants who overlook or misunderstand the fine print could have an unrealistic expectation of the rates they will pay. We have not lowered Costco’s rating too severely, however, because the fine print does explain that it is only showing the Qualified rates. If you suspect that Costco Merchant Services is charging you undisclosed fees, we recommend seeking a third-party statement audit to eliminate hidden costs.

Does Costco Merchant Services Deserve Your Business?

Review Summary & Our Thoughts

Above-Average Option for Most Businesses

According to our criteria, Costco Merchant Services rates as an above-average merchant account provider. As a reseller of Elavon contracts, Costco shows a lower complaint rate than Elavon and offers some mild additional value that its processor does not. The company’s rating was lowered because Elavon does not rate as an exceptional provider by our standards, and it is difficult to chart the complaints that might be filed against Costco Merchant Services. Merchants are advised in general to read their contracts carefully and to compare the company’s pricing to top-rated credit card processors to obtain the best deal.

5-Star Rated Costco Merchant Services Competitors

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About The Author

Phillip Parker is a Payments Industry Analyst and creator of this blog, CardPaymentOptions.com. Phillip is passionate about researching merchant service providers and payment industry trends. He is often quoted as an expert source in national publications such as INC Magazine, The Los Angeles Times, Entrepreneur, and many others.

“I started this blog because I was disgusted by the business practices of the merchant services industry. I wanted to empower business owners by providing insight on how to avoid shady merchant account providers and costly credit card processing mistakes.” 

Phillip’s Processor Comparisons

Picking a credit card processor can be a headache, but we’ve made it easy. Phillip recommends comparing the best merchant services providers we’ve researched.

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What Others Are Saying About Costco Merchant Services

Customer & Employee Reviews

7 Responses

  1. Leslie chin says:
    May 11, 2021 at 11:27 am

    Poor quality machines, poor customer service. Took 3 days to resolve a sim card issue. receipt print tiny, machine battery don’t last a day. We had 4 of them, all such bad build and all stop working due to sim card. Took 3 days of getting transferred around to get new sim cards.

    Reply
  2. Rosa Carretero Fung says:
    March 16, 2021 at 12:27 pm

    HORRIBLE Service with Elavon! I’m disappointed COSTCO has a partnership with them! I have a ingenico iCT250 I purchased through Costco some years back. Im a small business & only use their merchant services and was in need of software upgrade. So I call technical support for assistance, after 1 hr 45 min support was unable to further assist me and told me to take my devise home to try to do the download at home. So I do that set up at home call leave a message to call me back, they call me back after 30 min, I get transferred they hang up on me, don’t bother to return my call. I attempted to call again (3rd time) leave message elavon call me back in 30 min, I beg the tech support lady pls don’t not transfer me and not call me back. Gave her my number just in case this happened again. She was unable to help me, she “warm”transferred to support I wait for 40 min on the warm transfer. Finally a get help I beg them not to hang up and gave him my cell to call if I get dropped on the support call. On the phone with him gives me hope after he trouble shoots my software (1 hr) then YES he DROPS my call! Doesn’t bother calling me back! Nobody I’m did at this point! What the hell are they doing all day over there. What a dam waste of my off day (I’m a small business trying to get back on my feet) grand total of my wasted day with Elavon Support 4 fricking hours and they did NOTHING and didn’t fix my issue!!!! Costco wake up pls this company is so poorly managed! What a waste of my day! Moving on to a different system. No to cancel all of my account with this merchant!

    Reply
  3. Sheiva Pousti says:
    December 4, 2020 at 4:19 pm

    Elevon has completey defauded our account as well. We are executive members with Costco and are appalled how Costco is able to refer their members to this dishonest company. DO not use their services. I have been on a call for over 4 hours and their employees even refuse to disclose their names. They have fraudulent chargebacks without any letters or client names attached to it and they refuse to give us back our money. They are a scam. Do not use them. WE will be filing a lawsuit against them.

    Reply
  4. John Mahlmann says:
    August 11, 2017 at 2:11 pm

    I was defrauded of a great deal of money as a result of processing credit card transactions online. My manager had Elevon confirm the first transaction was valid and continued processing based on confirmation the transaction didn’t raise any flags. Now that the chargebacks have started to pile up, I’m required to pay hundreds of dollars in fees. Additionally, Elevon is withholding money from my account I will not owe for 90 days after the last chargeback. Getting call-backs and names of supervisors has proven exceeding difficult. This is not what one expect from a company that receives $25,000 a year in fees. I strongly recommend exploring alternative options.

    Reply
  5. William Cline says:
    May 20, 2017 at 5:36 am

    BEWARE!!! Elavon does absolutely nothing to represent or stand behind their merchants, so even if they offer slightly lower fees it just isn’t worth it as just one unjustified chargeback more than offsets any savings. We had a cardholder claim they returned an item back in February 2017 – it is now May 2017 – which they did not, and in their chargeback claim provided no documentation whatsoever of any such return. And yet, all Elavon did was route form letters to us ignoring all of the evidence we provided as to the charge, matches on address and security code, and authorization to process the charge. I don’t think they even took the time to read anything, instead just reflexively rolling over to allow this cardholder to commit overt fraud. Complete and total FRAUD. So do business with Elavon at your own risk, especially if you’re a small or medium size business that they take for granted. Of course maybe they take everyone for granted and are just running their own scam pocketing all the savings from their non-existent customer service and pathetically inadequate and incompetent transaction authorizations bordering on outright negligence.

    Reply
  6. Jon Acord says:
    December 28, 2016 at 8:40 am

    Horrible, stay away! I am AMAZED costco went thru them, I had talked to someone about perhaps going thru Costco payment processing. The person took some info, was going to call me back to fill me in with what they could offer, they charged my credit card $150, I have called them and repeatedly told them I dont want this, they have been charging my credit card every month, they will call me to say they want to help set it up, and I repeatedly tell them I did not want this, please stop charging my credit card. STAY AWAY!

    Reply
  7. SD says:
    September 11, 2013 at 3:00 pm

    Elavon is a rip-off….

    Everything looks good in the beginning with the low rates but look out !!! I had a terminal stolen, and Elavon wants $1226 to replace it !! How you ask… Elavon is asking me to buy out the full term of my contract as well as pay for the terminal to rectify this, and them start over with a new contract right away. They will not just sell me a new terminal to replace the old (3months) terminal and allow me to carry on business as usual. And they think this is alright and I will be happy to just go right back to them. They are smoking something down there.

    Stay awayfrom them.

    Reply

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