Yes, they do, and it's the best place to get them. They use a digital camera. So, you can check out your picture, before they process it. It's super cheap and convenient.
It's probably best to call the photo department and make sure, but they do have a photo department, and most Costco's that have a photo department will do the passport photos for you. Their price at $4.99 per pair of photos is a steal.
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