Flat-Rate vs Interchange-Plus Pricing

There are two main ways processors price the exact same service, and the simpler-looking one isn't always cheaper. Rather than describe them in the abstract, let's run one realistic month through both.

An illustration, not a measurement. Every figure in it follows from the assumptions, so treat it as a worked example rather than a typical result. Our example business: a small shop doing $20,000 a month across 800 transactions, a typical mix of debit, standard credit, and a few rewards cards, almost all in person.

Flat-rate pricing

One percentage covers every card, every time. The popular all-in-one apps built their brand on this. Their published in-person rates commonly sit around 2.6% to 2.9% plus a fixed few cents per tap, though they differ by provider and change from time to time, so read the current rate on the provider's own pricing page rather than trusting a number in an article.

On our example month at roughly 2.7%, the shop pays about $540. Simple, predictable, no monthly fee, no contract. For a brand-new or very-low-volume business, that simplicity is genuinely worth something.

The catch: the shop pays that same 2.7% on cheap-to-process debit cards that only cost around 0.3% in interchange. On those transactions, most of what they pay is markup. The overpayment is invisible on any one sale and real across 800 of them.

Interchange-plus pricing

Here the true interchange cost is passed straight through, and the processor adds one clearly-stated markup on top, say interchange plus 0.4% and a dime.

On the same month, the blended interchange might average around 1.6% (about $320), plus that 0.4%-and-a-dime markup (roughly $80 in percentage markup and $80 in per-transaction fees), landing the shop near $480 all-in, depending on the exact card mix. That's about $60 saved in a single month, roughly $720 a year, for the identical sales.

The tradeoff: the statement looks busier, and a dishonest processor can still bolt junk fees onto the side. Interchange-plus is only as good as the markup and the fees attached to it.

Which wins

• Brand new or very low volume: flat-rate usually wins on simplicity and no fixed costs.
• Steady volume, lots of debit and in-person sales: interchange-plus usually wins on true cost.
• Somewhere in between: it genuinely depends on your real card mix.

The honest catch to all of this: the numbers above are illustrative industry figures, not our price list. We don't have one. Your real answer depends on your actual card mix, ticket size, and volume, which is why a headline rate on a flyer tells you almost nothing. The only way to know is to run your real statement through both on a call, which takes about ten minutes and costs you nothing.