inside
costco
COMSTOCK
Credit-cardprocessing
fees for reward cards
IT’S ESTIMATED THAT 85 percent of U.S.
households count at least one reward card
among their credit cards. Let’s face it: They’re
a great enticement. You earn something—
money, miles, merchandise—when you spend.
Reward cards are a growing trend not likely to
slow down. One research group predicts that
within five years 90 percent of Americans will
have one. What does that mean for businesses?
While these cards may seem positive for
the user, they might not be as wonderful for
the merchant. Credit-card companies tell
merchants that reward cards increase spending. That may be true in some cases, but they
also increase costs to the merchant through
rising fees.
Many businesses don’t realize that reward
cards are processed at a higher rate than some
consumer cards, and those rates keep going
up. According to the Merchants Payments
Coalition ( www.UnfairCreditCardFees.com),
an organization representing retailers and
online merchants in transaction issues, fees
have risen 117 percent since 2001. Merchants
have to pass those costs on to cardholders
through higher prices—or let them eat into
profits.
It can be challenging to know how much
you’re paying for different card types. Even
when merchants contact their credit-card
processor, they may receive mixed messages.
You’ll get no confusion at Costco, because
the message is clear. Exclusive, clear-cut rates
are available for members through NOVA—
rates that are significantly lower than the
industry average, and reward-card rates that
can be about half of those charged by other
credit-card processors.
Contact NOVA for a cost analysis to help
you understand what you would save through
the Costco program. For more information,
go to costco.com and click on “Services,” or
call toll-free 1-866-213-4748 and refer to
priority code 83113.—Steve Fisher
Transaction fee comparison (per qualified transaction)
Card type
Industry average
Costco member rate
Consumer cards
Consumer reward cards
1.77% plus 24 cents
3.04% plus 25 cents
1.64% plus 20 cents
1.78% plus 20 cents
Feeling good while saving money
ARTVILLE
DAVID SMITH, president of the Kirkland,
Washington–based Mattress Depot, knows
firsthand the demands of running a small
business. Recently named one of the five fastest-growing businesses in the area by the Puget
Sound Business Journal, Mattress Depot has
eight locations and 24 employees.
When the business was just a few years old,
Smith took the plunge to find insurance for his
employees. With limited time to conduct his
research, this longtime Costco member says he
was impressed by Costco’s small-business
health and dental insurance program because
of the speed with which he got a quote, the
concise information provided and the ease of
administering the plan.
“The price was fair and the administrative
process was straightforward,” says Smith. He
adds that it takes only seconds to add or
remove employees from the program, and
he can quickly get quotes and set up deductions for part-time employees.
Smith is just one of tens of thousands of
Costco members who have experienced the convenience and ease of Costco’s health insurance
services, which include small-business health
and dental insurance, individual and family
health insurance and a group dental plan for
individuals and families.
Currently the small-business programs
are available in five states—California, Hawaii,
Nevada, Oregon and Washington—where
Costco has been able to contract with reputable carriers to help provide entrepreneurs
with affordable health and dental coverage.
Individual plans are available only in California.
“We’re looking to expand our programs to
additional states when we find the right value,”
says John Conlon, director of Costco Insurance
Services. “I encourage members to keep checking back with us to see what’s new with our
health insurance services.”
Costco is also preparing to launch group
life insurance in early 2008, which will help
business owners offer supplemental insurance
coverage up to $50,000 to employees.
As Smith says, providing coverage for
employees positively affects their morale and
work performance.
“I think most small-business owners know
they should be offering insurance,” he says. “A
lot feel it’s a daunting task and a financial burden. If they explored these options, they’d find
it isn’t so.”—Stephanie E. Ponder
