When considering credit card processing it is hard to ignore CostCo as a provider given their attractive advertised rates. It is also natural to expect savings given their brand is synonymous with savings. However, as with most things, analysis is needed to determine if the advertised savings will actually result in the best credit card processing account for your business.
- What are the rates and how do they apply
- What does your business transactional volume look like
What are the CostCo credit card processing rates and how do they apply
CostCo credit card processing rates are advertised as:
- 1.48% plus 20 cents per transaction for retail merchants (card present, person present transactions)
- 1.99% plus 27 cents per transaction for mail order, telephone order and internet merchants (card not present transactions)
- A free terminal rebate after 12 months of processing
It is important to understand that the advertised rate will only apply to transactions that meet specific criteria. For retail merchants the advertised rate will only be applied to Visa and Master Card swiped transactions for debit and non-reward credit cards. Reward credit cards are credit cards that offer a reward for use such as cash back, frequent flier miles etc. The rate will not apply for American Express or Discover. So in actuality, approximately half of your businesses transactions will downgrade to a higher rate. That higher rate is not disclosed until the application process is initiated. The typical downgrade is 1% so the advertised rate should be 1.48% – 2.48%.
What does your business transactional volume look like?
This is an important step in determining the right pricing for a merchant account. The CostCo credit card processing rates will affect the total monthly fee for the account differently depending on the volume of your transactions. For example:
If your business is internet based and the pricing is 1.99% and $0.27 a transaction
- For a $5.00 transaction the total fee would be 7.39% of the purchase
- For a $50.00 transaction the total fee would be 2.53% of the purchase
So if your business has a low average sale amount and a high number of transactions the $0.27 per transaction is where you need to focus. If your business has a high average ticket and a low number of transactions then you should focus more on the percentage of sale.In conclusion it is important to understand how the rates for a credit card processing account will affect your specific business. Until you know that, it is impossible to tell if an advertised deal is actually a good fit for your company. If you would like help understanding credit card processing rates and there effect on your business please don’t hesitate to call our friendly staff as we would be pleased to help. (800)917-8026