CostCo Credit Card Processing – a deal or not
Anyone who has a CostCo membership is familiar with the value the big box wholesaler offers on all sorts of merchandise and food. But, does the value translate to credit card processing? The answer may surprise you.
First of all it is important to understand that CostCo in not providing credit card processing. They are partnered with a company called Elavon who is a subsidiary of USBancorp. It is Evalon who is setting the terms and rates for the credit card processing account. Current at the time of this blog post the advertised rates for a CostCo credit card processing account are as follows:
- Retail Merchants: 1.48% for card-swiped transaction plus $.20 per transaction
- Internet and Mail Order / Telephone Order Merchants: 1.99% plus $.27 per transaction
As with most credit card processing providers advertised rates the rates look great. It’s the fine print that must be read to understand the actual rates that will be charged once the account is set up. Looking at CostCo’s website for their advertised rates we see the fine print:
"Rates listed are for qualified transactions. Rewards cards process at higher rates. Monthly minimum fee amounts to $20 per month."
To the average business this can be very confusing. What difference do rewards cards have on the actual rate charged? The answer – a lot, as statistics say that rewards cards currently account for 40% to 45% of all credit cards in circulation and are on their way to 93%. Let’s investigate further by looking at an actual CostCo bill:
Looking at the bill you will see that transactions that qualified for the advertised rate are in green and transactions that did not qualify for the advertised rate are in red. Simple analysis determined that over half the transactions on the bill were charged a rate above the advertised rate. This is not uncommon for an advertised rate. That is why it is very important to understand how the rates will be applied once the account is set up. For a detailed understanding of what to ask when shopping for a merchant account, download our report!