Pricing guide
Interchange-Plus vs. Flat-Rate Pricing: Which Costs Less?
Flat-rate pricing is simple. Interchange-plus is usually cheaper once your business grows. Here’s how each one works and how to tell which fits yours.
We break down what makes up your card processing cost, run a real-world example and list the pricing traps to watch for in any agreement.
Quick answer
The short version
With flat-rate pricing, every card costs the same, for example 2.6% + 15¢. With interchange-plus, you pay the card brands’ actual cost for each card plus a small, fixed markup. Flat rate is easier to predict and often fine under a few thousand dollars a month. Once you process more than that, take a lot of debit cards or run larger tickets, interchange-plus usually costs less, often by a few tenths of a percent of your card sales.
How they differ
Flat rate vs. interchange-plus vs. tiered
| Flat rate | Interchange-plus | Tiered | |
|---|---|---|---|
| How it works | One rate for every card | Card brands’ cost passed through, plus a fixed markup | Cards sorted into qualified, mid and non-qualified rates |
| Example price | 2.6% + 15¢ | Interchange + 0.30% + 10¢ | 1.69% qualified, up to 3.5%+ non-qualified |
| Debit cards | Same rate as credit | Much lower, at cost | Varies by tier |
| Easy to compare? | Yes | Yes, the markup is the only part that varies | No, the processor decides the tier |
| Best for | Low volume, small tickets, new businesses | Most established businesses | Rarely the best deal |
What you pay
The three parts of every card fee
Whatever pricing model you are on, every card payment has the same three parts underneath:
- Interchange. Paid to the bank that issued the card. It is the biggest piece and varies by card type: debit cards cost far less than premium rewards and business cards.
- Assessments. Small fees paid to the card brands themselves, such as Visa and Mastercard.
- Processor markup. What your processor and service provider earn. This is the only part that is negotiable.
On interchange-plus, you see all three separately. On a flat rate, they are bundled into one number, so you pay the same on a cheap debit card as on an expensive rewards card.
Real-world example
A restaurant doing $30,000 a month in card sales
Say a Phoenix café runs $30,000 a month in card sales with an average ticket of $30, which works out to about 1,000 transactions.
| Flat rate (2.6% + 15¢) | Interchange-plus (0.30% + 10¢) | |
|---|---|---|
| Card brand cost | Bundled in | About $600 (2.0% blended) |
| Percentage fee | $780 | $90 |
| Per-transaction fee | $150 | $100 |
| Monthly account fee | $0 | $15 |
| Total | $930 (3.1%) | $805 (2.7%) |
Which fits
How to choose for your business
Flat rate usually makes sense if you…
- Process less than a few thousand dollars a month
- Have very small average sales, like a coffee cart
- Are just starting and want one predictable number
- Sell seasonally and don’t want a monthly fee in slow months
Interchange-plus usually makes sense if you…
- Process more than about $5,000–$10,000 a month
- Take a lot of debit cards
- Have larger tickets, like auto repair, medical or contractors
- Sell to other businesses and can pass Level 2 and Level 3 data to lower corporate card costs
Before you sign
Pricing red flags to watch for
- “Qualified” rates. A low teaser rate that only applies to a few cards is tiered pricing. Ask what percentage of your cards will actually qualify.
- Markup hidden inside “interchange.” True interchange-plus shows the card brands’ cost and the markup on separate lines. If they are blended, it isn’t really pass-through.
- Extra monthly fees. Look for PCI, statement, batch, gateway and “regulatory” fees, and ask which ones you will really pay.
- Rate increases after signing. Ask for your markup in writing and how much notice you get before it changes.
- Early termination fees and equipment leases. A long lease on a terminal can cost more than the processing savings.
Already on a contract? Here’s how to switch without losing a day of sales, and see how cash discount programs work in Arizona.
FAQ
Card processing pricing questions
What is interchange-plus pricing?
Interchange-plus pricing passes the card brands’ actual interchange and assessment fees through to you at cost, then adds a fixed markup, such as 0.30% plus 10¢ per transaction. Every part of the price shows separately on your statement.
What is flat-rate pricing?
Flat-rate pricing charges one rate for every card, such as 2.6% plus 15¢ per tap, dip or swipe. It is simple to understand, but you pay the same rate on a low-cost debit card as on a premium rewards card.
Is interchange-plus always cheaper?
No. For businesses with low card volume or very small sales, a flat rate with no monthly fees can cost the same or less. Interchange-plus usually saves money once you process several thousand dollars a month, take a lot of debit cards or have larger average tickets.
What is tiered pricing, and should I avoid it?
Tiered pricing sorts transactions into qualified, mid-qualified and non-qualified buckets, and the processor decides which bucket each card lands in. Many rewards and business cards fall into the higher tiers, which makes the real cost hard to predict. Ask for interchange-plus or a flat rate instead.
Can I switch from flat rate to interchange-plus?
Yes. Send us a recent statement and we will show you what the same sales would have cost on each pricing model, then help you move over if it saves money. Check your current agreement for early termination fees first.
Do card brands change interchange rates?
Yes. Visa and Mastercard typically update interchange rates once or twice a year. On interchange-plus, those changes pass straight through to you. On a flat rate, the provider absorbs them or adjusts its price.
Sources: Visa U.S. interchange reimbursement fees · Mastercard U.S. interchange rates · Square payment pricing
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