Interchange Plus vs Flat Rate Pricing: Which Costs You Less?
Flat rate pricing charges one bundled percentage, often plus a per-transaction fee, on every sale no matter what card the customer uses, while interchange plus passes through the card networks' actual costs and adds a fixed, disclosed markup on top. Flat rate is simpler and can win at low volume or when fixed monthly fees are involved, but once you process steady volume with a typical card mix, interchange plus often costs less and is far easier to audit.
Key takeaways
- Interchange and network fees are the same no matter which processor or pricing model you choose. Only the markup changes.
- Flat rate hides the markup inside one number, so your true margin paid to the processor moves with your card mix and you never see it.
- Interchange plus is a structure, not a price. The markup can sit in the percentage, the per-item fee, monthly fees, or padded network fees, so compare the total.
- Flat rate can be cheaper for low-volume businesses, especially if an interchange-plus account carries fixed monthly fees.
- The fair comparison is what the processor keeps: total fees minus pass-through interchange and network fees.
What you are actually paying for in either model
Every card sale carries three layers of cost. Interchange goes to the bank that issued your customer's card. The card networks publish the rates, and they vary by card type (debit, rewards, corporate), by how the card was accepted (tapped in store versus typed into a virtual terminal), and by your industry category. A basic debit card tapped at the counter costs far less than a corporate rewards card keyed in over the phone. Assessments, or network fees, go to the card brand and are smaller. The third layer is the processor's markup, and it is the only part that is truly negotiable.
Interchange plus passes the first two layers through at cost, itemized on your statement, and adds a disclosed markup, usually written as a percentage plus a per-transaction fee (for example, 0.20% + $0.10). Your total bill moves with your card mix, but the markup stays fixed.
Flat rate bundles all three layers into one number, for example 2.6% + $0.10 for in-person sales and a higher rate for keyed or online sales. The processor pays the real interchange and keeps whatever is left. When your customers use inexpensive cards, the processor earns more; when they use expensive cards, it earns less. You never see which.
Worked example: the same month under both models
Example setup (all numbers made up for illustration): a retail shop runs $40,000 in card sales across 800 transactions, an average ticket of $50, mostly chip and tap.
Flat rate at an example 2.6% + $0.10: $40,000 x 2.6% = $1,040, plus 800 x $0.10 = $80. Total: $1,120 for the month, an effective rate of 2.80%.
Interchange plus: assume interchange and network fees average 1.80% for this card mix (an assumption; your mix will differ), which is $720. Add an example markup of 0.20% ($80) plus $0.10 per transaction ($80). Total: $880, an effective rate of 2.20%. The difference is $240 a month, or $2,880 a year.
Now look at what the processor keeps. Under flat rate, it is $1,120 minus the $720 in pass-through costs, or $400, which is 1.0% of volume. Under interchange plus, it is $160. That gap, not the headline rates, is the real comparison. Estimates are based on published industry averages and are not a quote. Actual rates depend on card mix, ticket size, industry, and underwriting.
When flat rate is the better deal
Low volume combined with fixed fees. Example: a business processing $3,000 a month with the same 0.6-point spread as above saves $18 a month on interchange plus. If that account carries $25 a month in statement, PCI, or gateway fees, the business loses $7 a month by switching. Read the fixed fees before you read the rate.
An expensive card mix. If most of your sales are keyed in, card-not-present, or on premium rewards and corporate cards, your actual interchange can approach a low flat rate, which shrinks the spread. Check which flat rate applies to how you really take payments, since many plans charge more for keyed and online transactions.
Simplicity has value too. Seasonal businesses, brand-new businesses with no processing history, and owners who want an exactly predictable fee on every sale may reasonably prefer flat rate. Just know what you are paying for that convenience. Estimates are based on published industry averages and are not a quote. Actual rates depend on card mix, ticket size, industry, and underwriting.
Run your own numbers
Enter three numbers from your statement and see what you could save per year.
Open the free Processing Fee Savings CalculatorWhat most comparisons get wrong
Most articles either declare that interchange plus is always cheaper or compare a 2.9% flat rate to a 0.20% markup as if those were the same kind of number. Both miss the point. Interchange plus is a structure, and the markup can live in several places: the percentage, the per-item fee, monthly fees, batch fees, a markup on network fees labeled to look like pass-through, or leftover non-qualified surcharges carried over from tiered pricing. For a small merchant, a quote of 0.15% over interchange with $0.25 per item and a $40 monthly fee can cost more than 0.30% + $0.10 with no monthly fee.
The second common miss: switching pricing models does not change interchange. The same card accepted the same way costs the same at the issuing bank no matter who processes it. What you can change is the markup and how you accept cards. Tapping or dipping instead of keying, sending address verification on online orders, and, for B2B sellers, passing Level 2 or Level 3 invoice data on commercial cards can all qualify transactions for lower interchange categories under either model.
So the only fair test is this: total monthly fees minus pass-through interchange and network fees equals what the processor keeps. Compare that number across offers.
Beyond the rate: holds, reserves, and contract terms
Flat-rate providers often approve accounts quickly with a light review up front and do more underwriting as you process. A large sale or a sudden spike in volume can then trigger a hold on funds or an account review. A dedicated merchant account, the usual home of interchange plus, is reviewed before you start. That means a slower start and generally fewer surprises later, though nothing is guaranteed under either setup.
Reserves matter for higher-risk industries or merchants with chargeback history. Example: a 5% rolling reserve held for 90 days on $40,000 a month holds back $2,000 each month, building to roughly $6,000 held at any time before releases begin. That cash-flow impact can outweigh any rate difference. Estimates are based on published industry averages and are not a quote. Actual rates depend on card mix, ticket size, industry, and underwriting.
Ask every provider about contract length, early termination fees, equipment leases versus purchases, how quickly deposits land, chargeback fees, and whether a reserve applies and how it is released.
How to compare using your own statement
Pull three figures from your most recent statement: total card volume, total fees, and number of transactions. Dividing fees by volume gives your effective rate. If you are already on interchange plus, your statement should list interchange by category separately from the markup. If you cannot tell which charges are which, that alone tells you something.
To skip the math, use our free Processing Fee Savings Calculator at https://touchsuite.com/tools/processing-fee-savings-calculator. Enter three numbers from your statement and see an estimate of what you could save per year compared with an estimated interchange-plus cost for your industry. You get the estimate right away; a detailed breakdown is available if you want it.
For a real number, ask any processor, including us, for an itemized quote based on your last two or three statements, with the markup separated from pass-through costs and every fixed fee listed. When you are ready, talk to a payments specialist at https://touchsuite.com/contact.
Frequently asked questions
Is interchange plus the same as cost-plus or pass-through pricing?
Usually, yes. All three names describe passing interchange and network fees through at cost and adding a separate markup. Ask the provider to confirm that network fees are passed through without an added margin.
Where does tiered pricing fit in?
Tiered pricing sorts transactions into buckets such as qualified, mid-qualified, and non-qualified, each with its own rate, and the processor decides which bucket a transaction lands in. It is generally the hardest model to audit, because you cannot easily see the markup on any single sale.
How do I know whether my interchange-plus quote is a good one?
Add up every markup component (percentage, per-item fee, and all monthly, annual, PCI, gateway, and batch fees), apply them to your actual monthly volume and transaction count, and compare that total with other quotes. A low percentage paired with high fixed fees can cost more than it appears.
Can I pass processing fees on to customers instead of switching pricing models?
Surcharging and cash discount programs are governed by card brand rules and by state and local law, and those rules vary. Confirm the requirements with the card brands and your state before adding any fee at checkout.
Will switching to interchange plus lower my interchange?
No. Interchange is set by the card networks and is the same with any processor. Switching only changes the markup. To lower interchange itself, change how you accept cards, for example by using chip or tap instead of keying, sending address verification online, or passing Level 2 or Level 3 data on B2B transactions.
How we put this together
Every dollar figure in this guide is a made-up example chosen to show the arithmetic, and the 1.80% blended interchange-and-network-fee figure is an assumption, not a measured average. Interchange rates come from tables the card networks publish and revise periodically, so the categories and rates that apply to you can change from year to year. The Processing Fee Savings Calculator uses published industry-average effective rates by segment and an estimated interchange-plus structure; those inputs are labeled estimates and are not TouchSuite pricing. Before acting, verify on your own statement your total volume, total fees, transaction count, how interchange and network fees are itemized, and every fixed monthly or annual fee. This guide reflects the pricing models in common use as of 2025 and 2026; confirm current interchange tables and contract terms when you compare offers. Estimates are based on published industry averages and are not a quote. Actual rates depend on card mix, ticket size, industry, and underwriting.
Estimates are based on published industry averages and are not a quote. Actual rates depend on card mix, ticket size, industry, and underwriting.