PROFITTHEORY

Payment economics

Interchange Plus vs Flat Rate: Which Costs Less?

Flat-rate pricing charges one percentage (plus a per-transaction fee) on every card. Interchange-plus passes through the actual card-network cost and adds a disclosed markup. Flat rate is simple; interchange-plus is usually more transparent and often cheaper as volume grows — but it depends on your card mix.

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Estimates only. Results vary. No guarantee of approval, rates or savings.

How each works

  • Flat rate: e.g. a set % + a fixed cents per transaction, regardless of card type
  • Interchange-plus: actual interchange + network fees, plus a fixed markup (e.g. a small % and cents per transaction)
  • Tiered: sorts transactions into qualified/mid/non-qualified buckets — the least transparent

Compare with your numbers

Take one month's statement. Under interchange-plus, cost = pass-through + markup × volume + per-item × transactions. Compare to flat rate × volume + per-item × transactions. Debit-heavy, card-present businesses often see the biggest difference.

Beyond the rate

Check monthly fees, contract length, early-termination fees and equipment terms. A low markup with high fixed fees can cost more for a small business.

Run the numbers

Blue = you enterGreen = calculatedGray = assumptionAmber/red = check this
$

Total card sales on your statement.

$

Add every fee line: discount, interchange, assessments, monthly, PCI, gateway.

Your effective rate

3.25%

Fees per year

$23,400

Avg. fee / sale

$4.88

Avg. ticket

$150.00

Effective rate is a diagnostic, not a savings quote. Card mix, card-present vs. keyed, and network rules change what any provider can offer.

Questions to ask your processor

  • • Is my pricing interchange-plus, tiered or flat-rate?
  • • What is your markup above interchange, in % and per item?
  • • Which monthly, PCI, statement or gateway fees apply?
  • • Is there an early-termination fee or equipment lease?
Request a payment reviewOptional. No statement upload needed here.

Estimates only. Results vary. No guarantee of approval, rates or savings.

Talk with a payments specialist

Common questions

Which is better for a small business?

Very low volume may favor flat rate for simplicity. As volume grows, interchange-plus usually becomes easier to compare and negotiate.