Interchange Plus vs. Flat Rate: Which Pricing Model Costs You More?
Two of the most common pricing structures compared side by side — so you can see which one fits your business and how much the difference is worth in real dollars.
Two pricing structures dominate the merchant processing market: interchange plus and flat rate. For low-volume sellers, the choice is relatively minor. For any business processing more than $5,000 per month, the choice can mean hundreds or thousands of dollars per year in real savings — or real overpayments.
What is flat-rate pricing?
Flat-rate processors like Square, Stripe, and PayPal charge a single, predictable percentage on every transaction — typically 2.6% to 2.9% plus a per-transaction fee. Simple to understand, easy to budget, and the right choice for very low-volume businesses or pop-up sellers who prioritize simplicity over cost optimization.
The catch: you pay the same rate on a basic debit card as you do on a premium rewards card, even though the actual interchange cost on a standard debit card can be as low as 0.05% plus $0.22. The processor keeps that margin on every transaction — and it adds up fast as your volume grows.
What is interchange-plus pricing?
Interchange plus passes through the actual network cost set by Visa and Mastercard (interchange) and adds a small, fixed markup on top — for example, interchange + 0.20% + $0.10 per transaction. You see exactly what the card networks charge and exactly what your processor adds. Nothing is blended, nothing is hidden.
For any business processing more than $5,000 per month, interchange plus almost always wins. As your volume grows and your card mix includes more standard debit and basic credit cards, the savings compound. Businesses processing $50,000 per month typically save $200 to $500 compared to flat-rate pricing on the same volume and card mix.
Interchange plus vs. flat rate: a direct comparison
Consider a restaurant processing $30,000 per month. At a flat rate of 2.7%, monthly fees total $810. Under interchange plus at an average effective rate of 1.9% plus a $0.10 per-transaction markup, the same volume runs closer to $640 — a difference of $170 per month, or over $2,000 per year. The more volume you run, the wider that gap becomes.
Which pricing model is right for your business?
It depends on your monthly processing volume, average ticket size, and card mix. Upload your current merchant statement and our free analyzer will identify your current pricing model, calculate your true effective rate, and show you exactly how much a switch to interchange plus would save for your specific business — with no obligation and no sales call required.
