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Costco Merchant Services Review


Costco Merchant Services Review

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  • No early termination fee
  • No PCI compliance fee
  • Mobile chip card reader


  • Expensive tiered pricing processing rates
  • Poor customer support


Costco Merchant Services is a merchant account provider headquartered in Issaquah, Washington. The company is a division of massive big-box retailer Costco, which has been in business since 1983. Costco’s Merchant Services division has been operating since 1997.

Despite the mammoth size of its parent company, Costco Merchant Services is not a direct processor. Instead, it functions as a reseller for Elavon, one of the largest processors in the United States. While Costco provides some modest discounts for merchants who have a Costco membership, Elavon performs the actual transaction processing and provides all other aspects of maintaining a merchant account (including billing and customer support). Unlike many other resellers, the company openly advertises its relationship with Elavon, featuring them prominently on the home page of their website. We approve of this practice, as merchants are commonly confused by the relationship between merchant account providers and their backend processors.

The most significant misconception about Costco Merchant Services is that, because the retail side of Costco’s business is so well-known for low prices, merchant accounts through the company must be less expensive as well. Unfortunately, nothing could be further from the truth. Costco Merchant Services offers few discounts over what you’d likely pay if you signed up directly with Elavon, and most of them are limited to Costco members. In fact, the company’s advertised tiered pricing plans could be even more expensive than working with Elavon directly, especially for a larger business.

Considering all the pros and cons, Costco Merchant Services earns an overall rating of 3.5 out of 5 stars. This is a very average rating, and it’s also the same rating that Elavon received in our last review update.

Read on for our full review, or check out our Merchant Account Comparison Chart for an overview of our top-rated providers.

Our Top Picks For Credit Card Processing

Products & Services

Costco Merchant Services offers a full range of features for retail and online businesses of any size. Because of their relationship with Elavon, many of these features are proprietary, Elavon-branded products. Here’s what they have to offer:

  • Merchant accounts: As we’ve noted, all transactions are actually processed by Elavon. Unlike most resellers, Elavon also provides all customer service and support.
  • Credit card terminals: Costco Merchant Services features the Ingenico iCT250 terminal as their primary hard-wired countertop terminal. This model has all the features you’ll need, including the ability to accept magstripe, EMV, and NFC-based payment methods. It’s priced at $459, which is a reasonable savings over the $499 price that Elavon charges on their website. The popular Verifone Vx520 and wireless Ingenico iWL250G terminals are also available, but pricing is not disclosed for these models. One word of caution: Elavon is notorious for partnering with Ladco Global Leasing Solutions, one of the worst credit card terminal leasing companies on the market. If you’re short on cash to buy your terminals, avoid the temptation to lease them. Credit card terminal leases are usually arranged through four-year, noncancelable contracts that will cost you many times more than what it would to just buy your equipment outright. A much more reasonable alternative is Costco’s Hardware Installment Plan, which allows you to purchase Elavon hardware and pay for it through three monthly, interest-free installment payments.
  • Wireless terminals: Costco Merchant Services also features the Poynt Mobile Terminal, a unique hardware offering that combines a tablet display with all the payment processing features of a credit card terminal. It can accept magstripe, EMV, or NFC-based payments and includes many features usually found only in a full-blown Point-of-Sale (POS) system. The Poynt terminal is now available in the United States, Canada, and Europe.
  • Point-of-sale (POS) systems: Costco Merchant Services users can take advantage of Elavon’s partnership with Talech to build their own, iPad-based POS system. You can run this system on a stand-alone iPad, or integrate it with the Elo PayPoint The dock includes an integrated cash drawer, barcode scanner, and receipt printer. Pricing is not disclosed for this system. Also, it’s currently only available on the iPad (sorry, Android users).
  • Mobile processing: Costco offers Elavon’s Converge Mobile app for mobile payment processing. It’s available for both iOS and Android. In addition to a smartphone, the app requires a ROAM device, which is basically an Elavon-branded Ingenico RP457c card reader. The reader can connect through either the headphone jack or Bluetooth. It supports EMV and NFC payments. Costco charges $149.00 for the Converge software and $76 for the ROAM device, plus $5.00 per month in account fees. Converge Mobile is only available in the United States.
  • Online payments: For eCommerce merchants, Costco Merchant Services offers Elavon’s Converge omnichannel payment platform. Converge combines the functions of a payment gateway and a virtual terminal, and uses a hosted payment page for additional security. The Converge software costs $149.00, plus an additional $5.00 monthly fee. You’ll also pay an extra $0.25 per transaction for swiped payments.
  • Security features: Costco uses encryption to protect your customers’ payment data, but doesn’t disclose the specific encryption method. It appears to be Point-to-Point (P2P) encryption, however. Tokenization is also used to secure payment data and ensure PCI compliance.

Because of Costco Merchant Services’ close relationship with Elavon, there may be other services available that aren’t described on their website. Contact a Costco sales representative if your business requires specialized services.

Fees & Rates

Costco Merchant Services prominently advertises the following processing rates on their home page:

  • On-Site & In Store: 1.22% + $0.12 per transaction
  • On-the-go: 1.22% + $0.12 per transaction
  • Online: 1.99% + $0.25 per transaction

In the fine print, they note that these rates are for qualified transactions only. Non-qualified (and mid-qualified) rates will be higher. In fact, they could be two or even three times higher. Costco doesn’t disclose those rates, of course, but you should be aware that only a small percentage of transactions will fall into the qualified category. The mention of qualified rates is a clear indication of a tiered pricing plan. We don’t like tiered rates, as they obscure how much markup you’re paying over the base interchange rate. They’re also almost always more expensive than interchange-plus pricing plans. For a more thorough discussion of how tiered pricing works – and why you should avoid it – see our article Tiered Merchant Account Pricing: The Epic Fail of a Pricing Model.

Costco isn’t as deceptive as some providers, many of whom post the qualified “teaser” rates without any other information or disclosures. The company includes an Understanding Interchange page on their website that provides a very basic explanation of how interchange works and discloses that there are both mid-qualified and non-qualified rates that might apply to your transactions. However, they don’t tie everything together by quoting what those rates are, or mentioning that the majority of your transactions will probably not be qualified. There’s also no discussion about monthly processing volume and how it relates to rate quotes. It’s possible that your business might have to have a very high volume to receive the lowest rates.

Our best advice is simply to ignore the rates quoted on Costco’s website. They probably won’t apply to most of your transactions, and they might not even be available if your business is too small. Instead, you’ll want to get a customized, detailed rate quote from a Costco sales representative to have a more accurate idea of what you’ll really have to pay. You’ll also want to carefully review your contract documents to see what types of transactions fall into which rate tiers.

Costco doesn’t mention interchange-plus pricing at all on their website, but it might be available if you ask for it. Elavon offers interchange-plus pricing to some of its merchants, so it’s likely that it’s available through Costco also. Companies that offer both tiered and interchange-plus pricing plans are more likely to try to set you up for one of their tiered plans, as they’re more profitable for the merchant account provider. If the company won’t offer you an interchange-plus plan, we recommend that you take your business elsewhere.

The company is also somewhat unique among merchant services providers in that it waives several account fees for merchants who are also Costco Executive members. If you have a membership, you won’t have to pay the $25.00 account application fee or the $4.95 monthly statement fee that everyone else has to pay. Unfortunately, this only adds up to $84.40 in savings during the first year of your contract, and a Costco Executive membership currently costs $120.00 per year. The application fee is a one-time charge, so after the first year, you’ll only save $59.40. In other words, it’s not worth it to purchase an Executive membership solely to save money on your merchant account. You’ll want to be able to save enough money when buying supplies for your business at Costco to justify this additional expense.

Costco Merchant Services discloses several fees on their website, but not all of them. This is more transparent than many competing providers who don’t disclose any of their fees at all. Here’s what you can expect to pay:

  • $20.00 monthly minimum
  • $10.00 chargeback fee
  • No annual fee
  • No batch fees
  • No IRS reporting fees
  • No PCI compliance fees

Other potential fees, such as PCI non-compliance fees, are not disclosed. You’ll want to check your contract very carefully before signing up to avoid being surprised by a “hidden” fee later. Overall, however, Costco’s disclosed fees are generally less than the industry average. If your business is seasonal, you’ll want to inquire about waiving the monthly minimum and monthly account fee (if there is one) during the months when you aren’t using your account.

Contract Length & Early Termination Fee

Costco Merchant Services contracts have a standard length of three years from the time you sign your contract. They also include an automatic renewal clause which will renew your contract for a period of one (or two) years at a time. The company does not charge an early termination fee (ETF) if you close your account before the expiration of your contract. These terms are identical to those imposed by Elavon for merchants who sign up directly with them.

The decision to drop the early termination fee is, of course, a welcome and positive change. Early termination fees have long been unpopular with merchants, and there is a growing trend within the processing industry to do away with them. However, it’s important to understand that not having an early termination fee is not the same thing as having a month-to-month contract. You are still obligated to keep your account open for the full three years, and you’ll have to take positive steps on your own if you want to avoid having it automatically renew. Closing your account will require you to follow all directions provided in your contract to the letter. While we weren’t able to obtain a copy of Costco/Elavon’s current Terms and Conditions, most providers require submission of a written form with a period of between 30 and 90 days before the expiration of your contract term. This is not something you can do over the phone. If you fail to provide the minimum required notice or submit the appropriate documentation, it’s quite likely that your contract will automatically renew, and you’ll continue to be billed for monthly account fees until you properly close your account.

Sales & Advertising Transparency

Costco’s sales process is better than some providers, but not as good as many others. The company’s website offers relatively little information to help you make an informed decision. While there are a few rate and fee disclosures, as well as some educational material, the site primarily focusses on the misleading tiered processing rates that we’ve discussed above. If you’re still interested in opening a merchant account with Costco Merchant Services after reading this review, we recommend that you contact a sales representative and obtain a full rate quote for your business. You should also ask to see the current Terms and Conditions that will apply to your account, as many of the “hidden fees” you might not be aware of will be disclosed there in the fine print.

We like the fact that Costco openly discloses its relationship with Elavon, as many providers don’t do this. Unfortunately, Elavon’s website doesn’t provide much information about rates, fees, or contract terms. In fact, the Costco site generally offers more concrete information, at least regarding account fees.

We haven’t found any complaints about the use of independent sales agents by Costco Merchant Services, and that’s a good thing. Independent agents are notorious for employing high-pressure sales tactics and failing to disclose important contract terms in order to sell accounts, whereas an in-house sales team generally provides much better service. Note that Costco Merchant Services doesn’t appear to have its own dedicated sales team. Instead, their website directs you to contact the Elavon sales division, which is available from 9:00 AM to 5:00 PM, Monday through Friday.

Because Costco Merchant Services functions as a division within the much larger Costco brand, it doesn’t have an independent social media presence of its own. Costco itself has a Facebook page, but information about their merchant services is not easy to find there.

Customer Service & Technical Support

Costco Merchant Services doesn’t provide its own customer support. Instead, you’ll need to contact the customer service division at Elavon. They’re available by telephone or email, 24 hours a day, seven days a week. While it’s nice not to have to worry about getting the run-around between your processor and your merchant account provider as to who is responsible for a given issue, having a single point of contact doesn’t mean you’ll get the best possible support. Elavon has a decidedly poor reputation for customer service and support, so you’ll want to try to solve the problem on your own before contacting them.

While Costco Merchant Services doesn’t provide a knowledgebase on their website for self-help, you do have access to other resources. The Elavon Welcome Center includes an in-depth knowledgebase with tutorials and equipment documentation. There are also several webinars available that you can access through the Costco Merchant Services website.

Negative Reviews & Complaints

Assessing negative feedback for Costco Merchant Services is difficult due to the company’s status as a division within a much larger organization. There is no separate BBB profile for Costco Merchant Services, and the main Costco profile contains hundreds of complaints that mostly relate to the company’s wholesale stores.

Because the company functions as a reseller for Elavon, most of the complaints relating to Costco Merchant Services are filed under the Elavon BBB profile. However, Elavon is a huge processor with numerous resellers, so finding complaints relating specifically to Costco Merchant Services is challenging. However, there are few fundamental differences between the services provided by these two business entities, so merchants signed up under Costco Merchant Services are likely to encounter the same issues as Elavon customers. Ripoff Report also has two complaints filed against Costco Merchant Services, both of which are from 2010.

Fortunately, our readers have provided some valuable feedback on previous versions of this review that sheds some light on issues to look out for when doing business with Costco Merchant Services. Be sure to read their reviews in the Comments section below. Common complaints include the following:

  • High tiered rates. While Costco prominently advertises their low rates for qualified transactions, our readers report rates for non-qualified sales as high as 3.35% + $0.29 per transaction. This is a more accurate reflection of what you will actually be paying, as many of your transactions will be non-qualified.
  • Poor customer support. Customer service is provided by Elavon, so it’s no surprise that this is a common problem. See our Elavon review for more details about the company’s reputation for inadequate customer service.
  • Sudden account closures. We’ve seen an inordinate number of merchants complain that they were approved for an account, only to have it suddenly closed by Elavon after a month or two of processing. To make matters worse, no refunds were provided for terminals that were purchased as part of the account setup. Like many other providers, Costco/Elavon does not support high-risk businesses, and they will shut down your account if they determine that you are a high-risk merchant. The best way to avoid this situation is to be completely open and honest about the nature of your business when applying for an account. It’s better to be turned down for an account before you’ve spent any money that you won’t be able to get back.

Positive Reviews & Testimonials

Unsurprisingly, the only positive feedback we could locate on Costco Merchant Services came from their own website. Their Customer Reviews page includes eight written testimonials from a variety of businesses that use Costco/Elavon. While we’re usually suspicious of self-promoted testimonials, these are actually pretty good. They include complete contact information for each reviewer, so it’s possible to follow up with them directly, if you want to confirm them.

Final Verdict

If you’ve been reading this far, you’ve probably already concluded that Costco Merchant Services is not for you. It’s true that the company has some significant problems, particularly its expensive and misleading tiered pricing rates. Also, their terms are virtually identical to what Elavon can give you if you sign up with them directly, leaving little incentive to sign up with Costco.

However, the company has made some improvements over the past few years. The elimination of the PCI compliance fee and the early termination fee are both positive steps, and reflect growing trends throughout the processing industry. At the same time, these meager cost reductions are going to be offset over time if you’re stuck with the tiered pricing rates that Costco uses by default. Unless you’re able to negotiate an interchange-plus pricing plan, we can’t recommend a merchant account from Costco Merchant Services. You’ll also want to be a Costco Executive member, although the cost savings this will gain you are negligible unless you can already justify the expense of a membership for other business purchases.

Overall, we’re awarding Costco Merchant Services 3.5 out of 5 stars. This is the same rating that we currently have for Elavon, and it’s indicative of the fact that there just aren’t many significant differences between the two companies as far as merchant accounts are concerned. While there are certainly much worse providers on the market, there isn’t any outstanding or unique feature offered by Costco that would cause us to give them a stronger endorsement.

Check out our merchant account comparison chart to see your other options.

Our Top Picks For Credit Card Processing

Frank Kehl

Frank Kehl

Frank Kehl has been writing about merchant services, payment gateways, and international money transfer services since 2015. He has a Bachelor of Science degree from Penn State and a Juris Doctorate from the Ventura College of Law. After a long and enjoyable career of traveling around the world as an Air Force navigator, he’s comfortably settled down in the wine country town of Paso Robles in California’s scenic Central Coast region. He enjoys reading, photography, hiking, and numerous other outdoor pursuits.
Frank Kehl
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Responses are not provided or commissioned by the vendor or bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the vendor or bank advertiser. It is not the vendor or bank advertiser's responsibility to ensure all posts and/or questions are answered.

    Michael Long

    Costco Merchant Services sponsor Elavon as the choice for Vendors credit card processing. Just got notified that Visa credit card processing fees will go up 39%. MasterCard remains the same at 2.07%. Anyone know why Costco/Elavon are discriminating against Visa? Til now Visa is used by about 80% of transactions in Canada. Might it have something to do with Costco Canada signing a MasterCard contract for exclusive credit card payments in their stores? I would say that is a pretty dirty strategy negatively affecting vendors unrelated to that contract. Does anyone understand why they would jack up Visa processing fees and not MasterCard?

      Jessica Dinsmore

      Hi Michael,
      Visa and MasterCard set their own interchange rates and transaction fees. Visa recently raised their rates (effective January 1st, 2019), and Costco/Elavon is probably just passing on the increase to their merchants.

        Amy Wishart

        Organization Name: Do It Yourself Documents

        Second month in a row that 2 Elavon/Costco Accounts have a statement fee. We are EXECUTIVE MEMBERS. Called last month and was told it would be correct and refund issue. Yup, no refund and this month’s statement also has a statement fee. Do they really think that people don’t look at their statements? Maybe if they do it to enough of us we would qualify for class action status!

        • Organization Name: Do It Yourself Documents
        Marie Grace Faith Inc

        Organization Name: Oak Lake Med Spa

        Worst Customer service ever, needed to update my account information, called customer support, firts they provided me with the wrong form to fill, then they claimed that they have requested more info that they never received so they closed my account.
        I had to do Another application to re-open the account and still has not been reactivated.
        Very complex and compersome and certainly it seems that they don’t care about my business.
        So I will be taking my business some where else!
        Very bad experience!

        • Organization Name: Oak Lake Med Spa
        LISA BIRD

        COSTCO continues to provide merchant services through Elavon, despite the overwhelming negative complaints and numerous unethical practices.

        Has Costco gotten so big that they now engage in unsavory relationships with crooked corporations?
        Costco has had a good reputation in the past. So disappointing and very sad, really.

          Dan Bilbo

          Don’t trust the rate on this company, I can’t believe that Costco associates it’s self with these crooks. They claim 1.22-1.99% (that’s only on debit cards at 1.99%), my first statement, only one card qualified for 1.99%, everything else was @ 3.35%. what a scam, should have just stuck with PayPal at 2.75%, cost me an extra $500 for one month! ***DON’T DO IT***


            This comment refers to an earlier version of this review and may be outdated.

            William Cline

            BEWARE!!! Elavon does absolutely nothing to represent or stand behind their merchants, so even if they offer slightly lower fees it just isn’t worth it as just one unjustified chargeback more than offsets any savings. We had a cardholder claim they returned an item back in February 2017 – it is now May 2017 – which they did not, and in their chargeback claim provided no documentation whatsoever of any such return. And yet, all Elavon did was route form letters to us ignoring all of the evidence we provided as to the charge, matches on address and security code, and authorization to process the charge. I don’t think they even took the time to read anything, instead just reflexively rolling over to allow this cardholder to commit overt fraud. Complete and total FRAUD. So do business with Elavon at your own risk, especially if you’re a small or medium size business that they take for granted. Of course maybe they take everyone for granted and are just running their own scam pocketing all the savings from their non-existent customer service and pathetically inadequate and incompetent transaction authorizations bordering on outright negligence.


              This comment refers to an earlier version of this review and may be outdated.

              Jason Wolf

              Big scamThey make it easy to buy the terminal from evalon for about $725Then a month later they like to close the account. Then no refunds for terminal. All they are is an out let to sell over priced terminals. Horrible customer service.


                This comment refers to an earlier version of this review and may be outdated.

                richard vogel

                i am the manager of a retail store in laguna hills,ca.i had an issue with my elavon credit card machine previous batch ,and called the merchant services phone number for service.i received an automated introductory message,which went on for it seemed 3 minutes;then it asked for my merchant #.then,more automated messages,and then the wait to speak with a human.the system placed me on hold with no further sound;not even canned music.after 10 minutes,i gave up and hung up.later in the day,i called again,and exactly the same thing’s a good thing i didn’t have a customer waiting;i would have lost the sale.why bother with customer service? elavon apparently doesn’t have humans to answer;i guess it’s more cost effective.


                  This comment refers to an earlier version of this review and may be outdated.


                  Have had Costco Elavon for going on 6 years – retail sales. Process about $200,000 a year through them. I thought since it was Costco it would be a good deal – ABSOLUTELY NOT!. Their processing fees are the highest I have found. The highest interchange on Visa that I could find is 2.10% and 2.40% if swiped – MY HIGHEST COSTCO ELAVON FEE IS 3.25% + .29 TRANSACTION FEEAND THAT’ AFTER NEGOTIAITNG 10% OFF. 35% OF MY MONEY VOLUME IS AT 2.55% AND 3.25%
                  I can’t believe that I really just started delving into this. Before it just seemed like to much to learn to weed through all the companies and rates. The cc processing sales reps are usually new to the job (it’s a tough job) and even though I didn’t know alot, they couldn’t provided answers.
                  Seriously, do your homework, i’m down to 2 companies and they are both able to beat Costco Elavon by 66% savings. Elavon is riding on the fact that people trust Costco. Costco Elavon bundles their cards, which if you investigate- HAS YOU PAYING THE PROCESSOR THE MOST AMOUNT OF MONEY.
                  The rep at Costco Elavon said “don’t you think we should make a profit? I said there’s a difference between a profit and raping someone who’s to stupid to figure it out”

                    This comment refers to an earlier version of this review and may be outdated.


                    I’m using shopkeep as my POS system and would like a good merchant service $10.00 a ticket and 13K a month…give or hopefully not take.


                      This comment refers to an earlier version of this review and may be outdated.


                      I just got Costco Merchant Application.
                      We are an Executive card holder so here are the rates we were given.

                      Qualified 1.38% $0.19
                      Rewards Qualified 1.99% $0.19
                      Mid-Qualified 2.65% $0.29
                      Non-Qualified 3.35% $0.29
                      Opt. Comm. Card Tier 2.65% $0.29
                      Debit 12c a swipe.

                      Monthly minimum $20 and no other fees or contracts.
                      Trying to do a start-up medical type office with transactions $65 to $85 average. Swipe only.
                      Any thoughts?


                        This comment refers to an earlier version of this review and may be outdated.

                        Tom DeSimone

                        Hi DZ,

                        This is not a good idea, in my opinion. Those tiered rates are not realistic. In many cases, the quotes here are below cost. This means that they would be losing money on your account, which is clearly not something they will allow to happen. To make up for it, they will either be increasing your rates almost immediately, or charging you a ton of money in hidden fees.

                        I would highly recommend choosing a different processor, and insisting on interchange-plus pricing without a monthly minimum. My first thought is that you should check out Helcim. They set up very cost-effective accounts.

                          This comment refers to an earlier version of this review and may be outdated.

                          Laurie Dion

                          Costco /Elavon
                          1. Qualified 1.56% per item $0
                          2. Rewards Qualified 1.99% per item $0
                          3. Mid-Qualified 1.99 % $0.0
                          4. Non-Qualified 2.07% $0.0
                          5. Opt. Comm. Card Tier 1.99 % $0
                          6. Debit 0.06 c a swipe.
                          plus no monthly service fees.

                          Elavon/Costco Canada offered me this morning Jan 19/2016

                            This comment refers to an earlier version of this review and may be outdated.

                            Scott Ebright

                            Abysmal, rinky-dink, completely USELESS service!! DON ‘T GET HOODWINKED by this amateur, inefficient company!!! COSTCO has really blown it now. You see, their sister company Elavon has recently been re-organized with ignorant, no nothing cheap helpers.Costco is just the pimp for Elavon services. They take their cut and then throw us COSTCO members out into the universal vacuum of terrible companies that don’t have the first clue about how to run any kind of service business!!! PURE RUBBISH!!! DO NOT BE A SUCKER FOR THIS RUSE…


                              This comment refers to an earlier version of this review and may be outdated.


                              I spoke with a rep today (10-22-12) and there is no contract and there are no fees anymore except if you don’t process during a certain month there will be a $20 minimum fee. However, if you are a seasonal business, that will be waived while you are closed. To me, this is the very best deal I have found so far.

                                This comment refers to an earlier version of this review and may be outdated.

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