Are these numbers truly non-negotiable? If that's the case, what's the incentive for a company like Costco to have exclusivity with American Express (who normally charges a higher than average fee)?
I've always assumed (maybe erroneously) that Costco received a lower processing fee in exchange for the exclusivity which pushes more transactions.
AmEx is negotiable (though usually it's the most expensive.. and Square cannot offer AmEx exclusivity like Costco can). Notice I said Visa & MC are the standardized, non-negotiable rates.
But you're right, they're not totally non-negotiable. Supposedly very huge retailers like Walmart get better rates. But Walmart does probably 20X Square's volume, even with Starbucks folded in.
I don't disagree (in fact, I think it probably is the case that they get a lower rate for being exclusive), but just to add: Costco also has a partnership with amex issuing their Costco branded credit cards (which isn't a store only card, it works out in the wild), and Costco gets some portion of the revenue whenever that card is used. Restricting you to amex also has a benefit of increasing the likely-hood that consumers will sign up for the Costco cc.
That makes a lot of sense, and it's also clear that transparency regarding rates isn't exactly in the vendor or the credit card companies' best interest.
I've always assumed (maybe erroneously) that Costco received a lower processing fee in exchange for the exclusivity which pushes more transactions.