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. The former of those figures is the company’s qualified rate which may not be available to every merchant depending on its credit history, industry, among other factors.

The terms of a contract with Costco Merchant Services impose 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 dedicates a portion of its website that advertises 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.

Low Complaint Volume

We only are able to locate few more than 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. However, given the date of many of these complaints in comparison to the company’s current policies, many of these issues may not affect new merchant accounts. For instance, the Costco Merchant Services website declares that merchants are not charged early termination fees. The one persistent issue seems to be higher than expected fees. A major factor in this may be due to the company’s website advertising qualified rates which may not apply to every merchant. However, albeit within the fine print, the company does convey this fact to visitors to its website.

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 2 entities.

Costco Merchant Services Lawsuits

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

No Dedicated BBB Profile

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.

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.

Clarity Needed on Rate Quotes

The Costco Merchant Services website prominently quotes 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. Those asterisks are expounded upon in the fine print beneath these quotes notes that these are the rates for Qualified transactions, but does not state that rewards cards (which receive mid-qualified and non-qualified rates) will process at a higher rate, nor does 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.