Costco has an advantage over everyone else -- they already know who you are before your purchase is complete. By scanning your membership card, they already have your average purchase profile.
They actually ask the credit card processor to approve you for $avg + X%, so as long as your purchase comes in lower than that, you've already been approved. If you make a really big purchase it will take a little longer, because they go back for a second auth for the bigger amount.
It's also why you'll see some people making $700+ purchases without having to sign anything -- because Costco already knows they do that every week and pay the bill on time so they assume part of the risk.
Citibank bent over backwards to get Costco. A few years ago Amex was the only card you could use at Costco. Citibank agreed to not only make a new card with better rewards to compete with Amex, but they agreed to honor all the reward points too. They just rolled over from Amex.
I'm sure Costco got a deal that gives them nearly at cost processing and a bunch of other stuff.
It was worth it for Citi too. The moment I got my Costco Amex replaced with a Costco Citi, the Citi became my primary card, because everyone takes Visa.
They actually ask the credit card processor to approve you for $avg + X%, so as long as your purchase comes in lower than that, you've already been approved. If you make a really big purchase it will take a little longer, because they go back for a second auth for the bigger amount.
It's also why you'll see some people making $700+ purchases without having to sign anything -- because Costco already knows they do that every week and pay the bill on time so they assume part of the risk.