Costco Merchant Services Review
Costco Merchant Services might not be the right fit for your business—and in some cases, it could cost you more than you expect. Here's what to know.
Overall Score | 2.4 | ||
Price | 2.5 | ||
Equipment | 3.0 | ||
Contract | 2.0 | ||
Customer Service | 2.5 | ||
Ecommerce | 3.0 | ||
High Volume Business | 3.0 | ||
Low Volume Business | 1.0 | ||
Pros and Cons
- Works with third-party terminals
- Industry-specific payment solutions
- Costco member benefits
- Long-term contract
- Monthly minimums
- Potentially pricey transaction fees
Bottom Line
Payment processing solution offered through Elavon
Costco Merchant Services might seem like a natural choice for Costco members, but it comes with significant drawbacks.
From potentially high rates to a lack of standout features, it may fall short compared to other payment processors.
Before you commit, take a closer look at what Costco Merchant Services offers—and whether it's the right fit for your business needs.
Who is Costco's Payment Processor?
Costco doesn't have payment processing services—it relies on Elavon, a third-party processor with over 30 years of experience.
As an industry veteran, Elavon serves more than 2 million customers and has processed over 8 billion transactions.
What's more, its partnership with Costco spans 27 years, showcasing a long-standing relationship. That said, longevity doesn't always equate to excellence.
While Elavon provides essential features like mobile, online, and in-person payment processing, there are notable downsides to consider (which you'll learn about later).
On the plus side, Elavon offers a variety of POS equipment like smart terminals. This allows you to accept credit cards, debit cards, and mobile wallet payments seamlessly from wherever you are.
Costco's Supported Industries
 |
Elavon supports a variety of industries such as retail, restaurant, healthcare, and service businesses.
For instance, you can use the dashboard to track inventory and decide if you need to restock.
If you're a restaurant, you can take payments on the floor, check for available seats, and customize menus right from the terminal.
If you're a healthcare provider, you can even connect health plans for a smoother payment process. This also keeps data secure and helps you stay compliant with requirements.
Given these upsides, learn the drawbacks too for the fuller picture.
Pros and Cons of Costco Merchant Services
Costco Merchant Services offers a range of benefits and some drawbacks that businesses should consider.
Be mindful of the following:
Pros:
- Industry-specific payment processing
- Compatible with other third-party smart terminals
- A+ rating from the BBB[1]
- Fee waivers for executive members
- Executive members can earn more savings
- No cancellation fee or early termination fee
- 24/7 customer support; dedicated customer support for Costco members
Cons:
- Underwriting process
- Long-term contracts
- Installation fees and other fees[2]
- Regular members pay application & statement fees
- Monthly minimums; inactive accounts can be suspended
- Rates and fees are subject to change
- Some poor customer reviews are alarming
Dive deeper into the fees in the next section.
"Executive Member" is a type of Costco membership that gets you an annual 2% reward (for up to $1,250) on your Costco purchases. You may also earn a 2% reward on Costco Travel purchases with this account.[3]
Costco Credit Card Processing Fees
Costco Merchant Services primarily offers tiered pricing. But there are other pricing structures you could choose from. That said, there are plenty of other fees aside from per-transaction fees.
Tiered Pricing
With tiered pricing, card payments are divided into qualified, mid-qualified, and non-qualified transactions. Qualified transactions are typically the most affordable.
It's not an ideal pricing model, since you don't really decide which transactions are qualified, and many of them may be non-qualified.
Costco's merchant services through Elavon provides affordable transaction rates–but these are for qualified transactions only. You'll need to contact Elavon for the rates of other transactions.
Here are your potential rates for qualified transactions:
| Swipe or Chip Transactions | 1.10% + $0.12 per transaction |
|---|---|
| Online Transactions | 1.90% + $0.25 per transaction |
According to Costco, executive members can save an average of $1,957 per year with their payment processing service.[4]
Flat-Rate Pricing
Elavon also offers flat rates if you prefer them.[4] These may look a little pricier, but these are applied to all card transactions (there's no qualification).
| Swipe or Chip Transactions | 2.30% + $0.10 per transaction |
|---|---|
| Online Transactions | 2.60% + $0.10 per transaction |
| Manually-entered Transactions | 3.20% + $0.10 per transaction |
This price range is competitive for some payment processors, but they're not the best rates. For instance, Square offers 2.6% + $0.10 per transaction to 3.5% + $0.15 per transaction.
But Square isn't a merchant account provider (so you get a less stable account). Helcim, on the other hand, charges 1.83% + $0.08 to 3.01% + $0.25 per transaction on average.[5]
While Costco and Elavon websites display basic processing rates and some miscellaneous fees, additional fees might still be associated with your merchant account. Carefully review the fine print before signing up to avoid any surprises.
Credit Card Surcharge
You may be able to have lower costs for payment processing if you surcharge your customers. Surcharging offsets credit card fees, so you'll be left with other payments such as debit cards.
If you surcharge, Elavon may charge your customers 3% for credit card transactions. On the other hand, you may pay 1% + $0.25 per PIN debit card transaction.[4]
Keep in mind that surcharging is not legal in all states. You can learn more about surcharge laws here.
Free Credit Card Processing with Surcharging
- You keep 100% of every credit card sale: when you sell $100, you receive $100. Pay only for debit card transactions.
- Fully Compliant
- CardX passes on the fee for credit card transactions only. Your customers can always choose debit as a no-fee option.
Enterprise Pricing
Similar to other credit card processors, Elavon offers customized pricing if you process over $1M per year. That said, this is a much higher volume requirement compared to the others.
Stax, for example, can get you custom pricing if you process a lot more than $250,000 per year.
Additional Costs to Consider
Other fees may sneak up on you, so be sure to inquire about ALL of Elavon's fees. You might see fees like:[4]
- Monthly minimum fee: $20 if you process less than $20/mo
- Application fees: $25
- Monthly statement fees: $4.95
- Equipment rental pricing: starts at $8/mo
You may also be charged installation fees, usage fees, taxes, etc. Be sure to read the fine print.
Costco Member Benefits
Being a Costco member gives you certain perks with Elavon. Mainly, you won't be charged the following fees:
- No application fees
- No statement fees
- No cancellation fees
- No annual fees
- No batch fees
- No reporting fees
- No additional authorization fees
Keep in mind that non-executive members do have to pay for application fees and monthly statement fees.
It's hard to pinpoint the exact cost of payment processing with Costco (or Elavon). This will depend on the types of payments you accept, the pricing structure you choose, the volume of sales you process, and other miscellaneous fees that may be involved with your account.
For reference, swipe or chip payments for businesses with tiered pricing may be charged 1.10% + $0.12 per qualified transaction, while qualified online transactions cost 1.90% + $0.25 per transaction.
With all of the fees involved, your contract length is essential to figure out how much Elavon can really cost you.
Costco Merchant Services Contract Terms
Costco Merchant Services may require you to sign a long-term contract, which can range from 12 months to 3 years. Your contract will automatically renew until you terminate it.
This long-term contract can be a potential drawback since many other payment processors offer month-to-month contracts. Short-term contracts can help you switch processors easily if you find that a processor no longer serves your needs.
What if I end my contract early with Elavon?
Since Elavon is the payment processor used by Costco, you'll need to consider Elavon's policy.
If you end your contract with Elavon early, you have to send back any leased terminal (like a card reader) to Elavon. They will provide a return box for any rented equipment.
You will also be charged the remaining terminal rental fees and a terminal recovery fee.[6]
Note that Elavon requires you to provide a notice of termination at least 1 month before you plan to end your contract.
Costco Payment Processing Solutions
Considering the costs and contract terms, it's important to weigh whether Costco's POS features make it worth the investment for your business.
Point-of-Sale Software
You'll get industry-specific solutions for your POS software.
For instance, these are some of what retail businesses can do:
- Manage inventory
- Manage customers and employees
- Set up online ordering
- Accept returns and exchanges
- Access robust reporting and analytics
Restaurants, on the other hand, can:
- Manage orders and menu
- Manage employees
- Set up online ordering
- Set up table layouts
- Manage cash drawers
If you're a service business, you can:
- Set up appointment booking
- Manage customers and staff
- Manage and send invoices
- Set up your products and services
- Surcharge your customers
The features you get depend on the plan within each industry. This can have drawbacks too since some features may be essential, but would require you a Premium or higher-tiered plan.
This can be especially true for inventory management and employee management features.
Elavon or Costco doesn't specify how much each of these plans cost. Software fees also depend on the smart terminal or POS equipment you choose.
Point-of-Sale Equipment
Elavon offers talech devices such as:[7]
- talech standard smart terminal: $20/mo or $655 (+ fees)
Ideal for retail businesses; lets you manage orders and inventory, track customer behavior, manage employees and customers. Software costs $34.99/mo. - talech smart terminal: $16/mo or $544 (+ fees)
Ideal for on-the-go businesses; lets you manage product catalog, and auto apply taxes, discounts, and service charges. Software is free. - talech premium (full POS system): contact for a quote
For full-service restaurants and multi-location businesses; includes a talech Register and can come with accessories - Moby/5500 card reader: $4/mo or $76 (+ fees)
For small businesses who don't need a lot of complex functionalities. Send receipts by email, generate invoices from the talech app, create discounts, etc. Software is free.
Elavon/Costco supports third-party equipment, too. You only need to consult them if your device is compatible.
Online and Mobile Credit Card Processing
Say you're a small business and don't need a lot of bells and whistles, check if Elavon's online and mobile solutions will suffice.
For instance, if you're a one-man team who provides professional services, you may be good with the talech Mobile app and a small card reader.
And if you don't need to accept payments in person, the payment gateway may be sufficient too. Elavon's payment gateway lets you manually enter card payments, send digital receipts, and create repeat or subscription customers.
Costco Credit Card Processing Customer Reviews
Elavon currently generally has good customer reviews, with an average rating of 4.0/5 stars out of over 300 reviews in Trustpilot. This isn't a lot of reviews compared to other processors, but it's still a good indication of its service.
That said, Elavon has also received a mixture of good and bad reviews. Here are a few you might want to know about.
Setup and Customer Support
Clients are generally satisfied with Elavon's customer support, calling the agents "knowledgeable."
The customer service agent was polite, knowledgeable, kind, thoughtful, and expeditious in the help she gave me. Could not have asked for a better or more positive experience.
— Marco from Trustpilot
I called with 2 questions. Valerie answered and she was very knowledgeable about both items I needed. She was friendly and went above what I have expected from customer service. I hope I get Valerie every time I call in.
— Loretta S. from Trustpilot
Pricing Reviews
The bulk of Elavon's negative reviews revolve around pricing and account problems. Either clients experience account holds, continuously being charged in spite of closing the account, or fees they didn't know about.
We were only with Elavon for 14 months. We switched, thinking it would be an upgrade from a prior merchant service company. However, it was a bad move, and we had to switch again.
Money was lost/missing. "Approved" transactions were not reaching our account. Our accountant and business manager were baffled. Ultimately, the problem was identified as being with Elevon card processing, and it took MONTHS to get it resolved, and they were non-responsive at multiple levels of the company.
— Joel Abbott from Trustpilot
These guys will charge your customers and hold the money and not release it for months. Regardless whether you have chargebacks or not. They have an inept risk control department that makes up reasons not to payout funds.
Still waiting on $11,000 I processed through them to be paid out to me. They refused to refund the customer and refuse to pay out to the vendor…
I signed up with them only because they were a Costco partner. Even shelled out $400 for their card reader which was a waste of money…
— Owner from Trustpilot
…Charged me for Non-compliance when they never notified [me] that I had to comply. They admitted they put my email in wrong and that is why I never got a notice to comply - [thousands] of dollars of charges.
I switched service providers then got a $300 fee from [Elavon] AFTER I cancelled them and returned [the] machine… [Told] me they can't help me because I cancelled services.
— Dawn from Trustpilot
Having said this, the general average of the reviews look a lot different on the side of BBB. Customers have rated Elavon 1.08/5 stars, albeit having only 36 reviews.[1]
Here are samples of what people talk about:
—Rohail K from BBB
Their fees are exorbitantly high. There are some employees that are really helpful in the organization - but basically they do NOT have the power to make real adjustment or changes. Horrible company…
— Chris D from BBB
If you're not satisfied by these reviews, consider alternative providers like Helcim, which enjoys a positive reputation for providing prompt and effective customer support.
Start Accepting Payments Fast
- Interchange Plus Pricing
- No Monthly Fees
- No Contracts
Does Costco Merchant Services Live Up to Its Reputation?
Costco Merchant Services have a mixed reputation. On one hand, you have many clients frustrated with the services, especially with issues like frozen accounts and surprise fees.
On the other hand, you have clients expressing their satisfaction with Elavon's "knowledgeable" customer service.
It's best to consider the two sides when deciding to go for Costco.
What's more, although Costco Executive Members can save on processing fees, other processors can offer similar competitive rates minus the extra fees.
If you ever find yourself having issues, you can contact Costco or Elavon at their available schedule.
Costco Credit Card Processing Customer Support
| Set up a new merchant account with Elavon | 1-866-671-1583; available from 9:00 AM to 7:00 PM EST, Monday to Friday |
|---|---|
| Elavon customer support for existing accounts | 1-800-725-1243; available 24/7 |
| To get a Costco membership | 1-800-774-2678 |
Also, Elavon has multiple office locations which you can find on their website.
Costco Credit Card Processing Lawsuits
Both Costco and Elavon has been involved in lawsuits you may want to know about.
Costco actually accused card brands Visa and Mastercard, and other banks such as Bank of America and Chase, of conspiring to charge businesses very high transaction fees for credit cards.
This was settled last 2022, after about 17 years of litigation.[8]
On the other hand, Elavon's multiple lawsuits include those concerning data security. One of which involved Cisero's Ristorante and Nightclub in Utah, who experienced a data breach last 2008 which affected over 8,000 card accounts.
While Elavon sued Cisero for the fines, Cicero counterclaimed last 2010 that there was, in fact, no breach, arguing improper fine deductions.[9]
The Final Verdict—Is It Worth It?
Costco Merchant Services might not be the best idea for a credit card processor.
There are plenty of other credit card processing companies that may be more suitable, whether you're a retail, restaurant, or professional service business.
Many offer more features for a more affordable price. Plus, you won't need to worry about having a Costco membership.
Also, other processors offer free card readers and more stable merchant accounts. You can also get more affordable rates and have room to negotiate.
Check out some of Costco's alternatives below.
Costco Credit Card Processing Alternatives
Helcim, PaymentCloud, and Stax are some of the best merchant account providers in the industry.
Helcim: For Scaling Businesses
Helcim is a merchant account provider, like Elavon. But you get more transparent pricing with their interchange-plus model.
You also get no contracts, no monthly fees, or hidden fees. Plus, your free account comes with essential features like a virtual terminal, invoicing, POS, recurring billing, and online checkout.
Also, Helcim offers amazing customer service. The processor currently has a 4.1 out of 5-star rating on Trustpilot.[10]
Start Accepting Payments Fast
- Interchange Plus Pricing
- No Monthly Fees
- No Contracts
PaymentCloud: For High-Risk Businesses
PaymentCloud is another merchant account provider like Elavon, and it supports low-risk to high-risk businesses.
It offers online, mobile, ACH, eChecks, cryptocurrency processing, and more. You'll also get customized pricing for your business.
When you need help with your account, you can count on your dedicated account manager. The processing company has also received numerous positive reviews regarding its customer service, with a 4.7 rating in Trustpilot.[11]
High Risk? No Problem
- Competitive Options for Payment Processing at All Risk Levels
- Fast Funding
- No Setup/Hidden Fees
- No Minimum Credit Score
- All Industries Accepted
Stax: For Larger Businesses
Stax is a merchant account provider that offers subscription pricing, which is why it's better suited for larger businesses.
You only need to pay the monthly fee starting at $99/mo plus the direct-cost interchange per transaction.[12] Interchange rates are usually more affordable than flat-rates from other processors.
Your account will come with essential features like digital invoicing, reporting, website-hosted payment links, scheduled payments, etc.
Stax has also garnered good reviews from its clients, just like Helcim and PaymentCloud. It has an average rating of 4.1 out of 5 stars from Trustpilot.[13]
Save Up to 40%
- Flat Monthly Subscription Price, Starting at $99
- 0% Markup on Direct-Cost Interchange
- 24/7 Support
How to Choose a Credit Card Processor
When choosing a merchant services provider, take note of:
- Payment processing fees
Costco Merchant Services does offer competitive pricing. But this can get expensive and confusing if you're offered the tiered pricing model. - Accepted payment types
You can accept card payments from major card brands. You can also process in-person and online payments, or take keyed-in payments with the virtual terminal. - POS System
There are various talech software to consider, from retail, to restaurants, to services. Make sure that the POS software you're getting caters to your needs. - Integrations
Elavon integrates with many business tools, so you may find one you already work with. Some of this software includes WooCommerce and BigCommerce. - Security and fraud prevention tools
Elavon uses encryption and tokenization with its payment processing solution. - Customer support
Customer support is essential since you'll be dealing with payments, and you'll likely want help and answers right away.Unfortunately, Elavon's customer experiences are mixed, so you can't exactly be sure of what you're getting.
Bottom Line
Costco Merchant Services can be a suitable option for Costco Executive Members or Costco members in general.
But it's not the best option if you're thinking of getting a Costco membership just for the sake of opting for Elavon's payment processing solution.
There are plenty of other credit card processors out there that offer competitive and customized pricing according to your needs.
References
- ^ BBB. Elavon, Retrieved 12/11/2024
- ^ Costco. Costco Merchant Account, Retrieved 12/11/2024
- ^ Costco. Executive Rewards, Retrieved 12/11/2024
- ^ Costco. Merchant Account, Retrieved 12/11/2024
- ^ Helcim. Pricing, Retrieved 12/11/2024
- ^ Elavon. Terms of Service, Retrieved 12/11/2024
- ^ Costco. POS, Retrieved 12/11/2024
- ^ Top Class Actions. Costco Class Action Lawsuit, Retrieved 12/11/2024
- ^ Bank Info Security. Breached Merchant Sues Processor, Retrieved 12/12/2024
- ^ Trustpilot. Helcim, Retrieved 12/11/2024
- ^ Trustpilot. PaymentCloud, Retrieved 12/11/2024
- ^ Stax. Pricing, Retrieved 12/11/2024
- ^ Trustpilot. Stax, Retrieved 12/11/2024
Square Reader: Free Mobile Credit Card Reader
- Pay 2.6% + 10¢ Per Swipe for Visa, Mastercard, Discover, and American Express
- Accept Credit Cards Anywhere
- Fast Setup, No Commitments
Save Up to 40%
- Flat Monthly Subscription Price, Starting at $99
- 0% Markup on Direct-Cost Interchange
- 24/7 Support
Free Credit Card Processing with Surcharging
- You keep 100% of every credit card sale: when you sell $100, you receive $100. Pay only for debit card transactions.
- Fully Compliant
- CardX passes on the fee for credit card transactions only. Your customers can always choose debit as a no-fee option.
Chase Payment Solutions℠
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- Get paid fast and manage your business from anywhere with the Chase Point of Sale system. Use our mobile app, reader and terminal to take payments via tap, dip and swipe.
- Process payments with Chase Payment Solutions, the #1 merchant acquirer in the U.S.
- Tap to Pay on iPhone offers you the ability to accept contactless cards, Apple Pay and other digital wallets on your iPhone – no additional hardware required.
- Chase Customer Insights is a complimentary business intelligence platform that offers simple, actionable analytics and reports to help you make better business decisions and reach more customers.
Write to Karen Eloriaga at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.
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