I was told by a couple of sources in those very early days (when Citi/Visa was taking over from Amex) that Costco negotiated 0% interchange fees on transactions at Costco. Certainly that explains why the returns counter is always happy to give me cash for my returns instead of insisting, as most merchants do, that it go back on the same card used for the purchase. (Well, Costco's terrible IT might also explain that...)

Could be the person was wrong or maybe they misunderstood that it was interchange plus zero, but Costco is such a halo product that Visa may have been willing to forgo or even subsidize revenue from Costco to ensure that the Costco member base carried a Visa in their wallet for all their other shopping as a way to stave off losing customers to MasterCard. (And supposedly Capital One/MasterCard was in the running for the Costco contract, too, so no doubt Costco was playing the two off of each other.)