Costco Merchant Services Overview
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 is indicated clearly on the department’s 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 Headquarters and 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.
- Rates & Fees: How Merchants Got The Best Rates With Costco Merchant Services
Types of Businesses Served
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Costco Merchant Services Rates, Fees, and Costs
|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|
|Monthly Statement Fee||$4.95|
|Equipment Lease Terms||48 Month (locked)|
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.Are you happy with your Costco Merchant Services fees? Tell us about them before your go!
Costco Merchant Services Complaints & Customer Reviews
|Total Online Complaints||10+|
|Live Customer Support||Yes|
|Most Common Complaint||Higher than Expected Fees|
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.
Costco Merchant Services BBB Rating Summary
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.
Truth In Marketing & Advertising
|Employs Independent Resellers||No|
|Advertises Deceptive Rates||No|
|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.
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.
About Phillip Parker
Thank you for reading my review. I hope that it has helped you with your research.
Why I'm Qualified to Write About Credit Card Processing and Merchant Account Services
I'm a former credit card processing sales director who left the industry because I didn't like how it takes advantage of small business owners. It feeds like a leech on businesses and thrives by imposing fees that are nearly impossible to comprehend. Seeing a need for change, I left and built this website help business owners better understand the industry, research merchant services providers, and get refunds of excessive merchant account fees. My experience of working "behind the curtain" in the industry, and using that knowledge for good, has resulted in millions of dollars returned to hard-working small business owners as well as enterprise-level companies.
From the time that I starting working in the merchant services industry to when I left to create this website, I've been on the pulse of payments for nearly 15 years. It didn't seem fair to keep this "insider" knowledge to myself. To lift the fog, I've reviewed hundreds of companies, read thousands of user reviews, and learned the pricing tricks of every provider. If you have questions about credit card processing, you can find the answers on this website.