If you're looking at CostCo for merchant services, you should just go directly through Elavon. Besides a few waived fees for CostCo's executive members, there are really no benefits to choosing CostCo over Elavon or a totally different company. Choosing a company who is a reseller only creates more confusion, as there is an unnecessary middleman.
When business owners think of CostCo Merchant Services, they assume they'll be getting great deals on their card processing, just like the wholesale prices on bulk cereal. Unfortunately, this isn't the case. Dig a little deeper and you'll discover that CostCo doesn't even provide credit card processing. They are actually a reseller of another merchant services company called Elavon, who is one of the biggest card processing companies serving about 1.2 million merchants.
Merchants who seek out CostCo's payment processing services can learn this information by visiting the CostCo page for merchant services. That page redirects merchants to Elavon, where Elavon offers special pricing for CostCo members. This redirection provides a little less confusion for the merchant, because now the merchant knows that they're purchasing Elavon services. This fact wasn't so clear in the past.
If you're not a CostCo member, you're probably not interested in this deal. You can simply move on to our Elavon review to learn if Elavon is right for your business. Otherwise, stick around to learn whether or not this deal is worth the price of an annual CostCo membership.
Below is a detailed review of CostCo Merchant Services offering. The review is broken down into the following categories.
Depending upon the type of business you own, some of the following features may or may not be important to you.
In this case, we'll presume that the features that CostCo once offered are the same as Elavon's features:
|Microsoft Dynamics GP||No|
|Windows / Blackberry||No|
|iPhone / iPad||Yes|
|Alternative Transaction Types:|
|Snail Mail Orders||Yes|
|Add Tips to Bills||Yes|
|eCommerce / Shopping Cart||Yes|
|EMV Chip Cards||Yes|
|Loyalty / Gift Cards||Yes|
|eChecks / Electronic Checks||Yes|
|Welfare Benefits (EBT/SNAP/TANF)||Yes|
|Security / Fraud Prevention:|
|AVS Fraud Protection||Yes|
|PCI DSS Secure Transactions||Yes|
|HIPAA Compliance (Healthcare)||Yes|
|Trust Account Debiting (Legal)||No|
|Fleet Cards (Petroleum)||Yes|
|Online Menu Orders (Restaurants)||Yes|
Almost every merchant account services company uses either Interchange Plus or Tiered Pricing (to learn the differences read here). Where companies allow us to disclose pricing information, we show the deals that our secret shoppers were able to achieve. When companies offer both Interchange Plus and Tiered Pricing, we try to get a quote on both options.
CostCo uses tiered pricing, which is quoted as a percentage and a flat transaction fee:
In the fine print Costco states that these prices are for qualified transactions, but we don't know what the qualified tier consists of. It says that rewards cards process at a higher rate, but we don't know exactly how much higher. They also say that "rates and fees may change without notice." and that definitely is not good.
In addition to the fine print costs listed below, Costco adds a $4.95 monthly statement fee for non-executive members (waived for executive members). We based most of the costs below on Elavon's rates, as Elavon is the service provider.
|Fine Print Fees:|
|Setup / Application Fee||$25|
|PCI Compliance Fee||None|
|PCI Inaction Fee||None|
|Online Reporting Fee||None|
|Monthly Minimum Volume Fee||$20|
|Accept International Pymt Fee||Yes, variable|
|Voice Authorization Fee||$.65 minimum per transaction|
|Monthly Min. Process Fee||$25 maximum|
|Daily Batch Fee||None|
|ACH / Direct Deposit Fee||Yes|
|ACH Charge Fee||Yes|
|ACH Return Fee||Yes|
Our Take: The "possible" charges may or may not exist, depending upon your type of business and equipment used, especially to process check transactions. In the case of pricing and fine print fees, a middle man can always make changes and markups, so be aware that what you see at Elavon may not be what you'll see from Costco.
While your transactions usually take place electronically, the actual device that you use to swipe a customer's card is referred to as "the equipment." This equipment includes hardware and, often, software or apps for that hardware to function properly.
CostCo doesn't offer any equipment for free. They recently started selling equipment instead of leasing, which is good because you can keep your terminal even if you switch companies.
CostCo also offers a small portable terminal, the Ingenico iWL250G. It supports on the go processing without needing an internet connection or phone line. It also has optional accessories available to purchase: car charger, spare battery, dock, carrying case, etc.
Instead of downloading software or an app, CostCo offers its users access to their website called "Converge," formerly VirtualMerchant. It allows users to manage transactions in all payment environments (in-store, mail/telephone order, mobile, and e-commerce). It also accepts all payments types including electronic checks and gift cards.
CostCo Merchant Services can handle payments from and for merchants in the United States, Canada and abroad.
I generally don't like long-term contracts or termination fees in merchant services agreements, because the ability to cancel keeps the credit card processor on its best behavior, including the willingness to make you happy if there's a dispute. Plus, this ability to cancel gives you the ability to move on if you find a better deal.
Elavon offers contracts with no early termination fees, so you can be on a more month-to-month basis. You will just have to take the required steps to cancel your account when you want, or else you'll continue to get billed. There is also an auto-renew after two years, so you should be sure to keep an eye on that complication. CostCo customers should expect no less.
The merchant account services industry is multi-layered. Understanding how those layers fit together can be confusing (Read More in this Article). A good thing to know, however, is whether or not your company is a direct processor (good if yes) or, if not, then to know who they process with and whether or not that processor is reliable. The second thing to know is whether or not the service or sales staffs are in-house or outsourced. In-house staffs are preferable for you, as these staff members may have more access to sources that can resolve your issues.
Processor: Elavon, the company that CostCo sells to merchants as their service, is the 4th largest credit card processor in the U.S. They take care of everything, which is great. Cutting out the middleman where ever you can is always a good idea because it gets rid of unnecessary confusion and can possibly save you money.
Account Sales: Elavon's account sales are all conducted with a corporate sales department. Of course, you should make sure you are talking with a good sales rep because that makes a huge difference. If you choose to go through one of Elavon's many resellers, your sales experience might not be great. Most customer complaints are about customer service through resellers such as CostCo, not Elavon directly.
The most common complaints about CostCo's merchant services are hidden fees and bad customer service. Since customer service and tech support comes from Elavon, please read our Elavon review to learn more about their services.
|PCI Compliance Fee||$0.00|
|Online Reporting Fee||$0.00|
DISCLOSURE: Advertising, Affiliate and Conflicts of Interest: Merchant Negotiators accepts advertising via the Google Adsense platform, directly from advertisers, and has common parent ownership interests with other payments related companies leading to conflicts of interest. Read our Affiliate / Conflicts / Advertising Disclosure for a more detailed disclosure.
About the Reviews: These reviews, and for that matter any reviews, are inherently subjective, and should be regarded as our opinion, not as a statement of fact. Selecting a merchant services provider is an important decision, and we urge you to use no single source of information as the basis of that decision.
About the Pricing: This pricing is an estimate based on limited available information. In some cases, the Processors' pricing information was provided directly by the company, in others, we obtained it from public information, through calls to the company, or through past or current clients of the company. Where, despite these efforts, we were unable to obtain any information about certain fees, we used estimates based on similar providers in the industry. While we're working, in some cases, with the company directly to get more accurate pricing, even in those circumstances, we can't guarantee the pricing's accuracy. Complicating all of this, is that for some companies individual salespeople are given authority to modify terms on a deal by deal basis. In any case, if you know of an error, please let us know and we'll fix it.
About the Calculations: With respect to your estimated savings, this is based on a lot of factors and some hard math. The reason we do it, along with the "Actual Gross Rate" calculation is that every Processor prices their product differently (e.g. interchange v. 3 tier v. 4 tier v. flat v. membership, etc.) and some make it intentionally complicated or opaque. Trying to convert their pricing structure to a consistent "Overall Cost of Processing" is the only way you, the merchant, can do an apples to apples pricing comparison and know whether an offer is actually a good deal. Our system isn't perfect but we're trying.
Conclusion: In sum, these rankings, ratings, and scores are inherently subjective, and should be regarded as our opinion and not as a legal statement of fact. Moreover, use these prices and estimates at your own risk, and make sure to verify the pricing you see here in any formal contract you receive. Finally, if you do find something wrong in our pricing, terms, etc., tell us and we'll try to fix it.