Why Interchange Plus Is the Gold Standard in Merchant Pricing Models
Introduction
In today’s complex payment ecosystem, businesses face a maze of pricing models—flat-rate, tiered, subscription-based—but only one delivers true professional-level transparency: interchange plus.
If you're ready to understand where every penny goes and potentially cut thousands off your processing costs, this is your guide.
What Is Interchange Plus?
A Transparent Pricing Formula
Interchange plus (also known as cost‑plus or pass‑through pricing) breaks down your credit card processing fees into two clear parts:
Interchange Fees – Paid to the card-issuing bank.
Assessment Fees – Paid to the card network.
Processor Markup – A small, negotiable fee added by your processor.
Format:
Interchange + 0.30% + $0.10
How It Works
Each time a customer pays via card, the transaction fee flows through these components:
Issuing bank takes the interchange fee
Card network applies the assessment fee
Processor adds their markup
Unlike bundled or tiered pricing models, you see each of these fees line by line.
Fee Components Explained
Interchange Fees
Set by Visa/MasterCard
Based on card type, transaction method, and merchant category
Ranges from 0.05% + $0.22 (regulated debit) to 2.40% + $0.10 (rewards credit)
Assessment Fees
Charged by card networks
Typically 0.13% to 0.15%
Processor Markup
The only negotiable part
Usually 0.10% to 0.60% + $0.05 to $0.25 per transaction
Crucial for managing your overall cost
How It Compares to Other Models
Flat-Rate Pricing
Example: 2.9% + $0.30
Simpler but often 20–30% more expensive
Lacks line-item visibility
Tiered Pricing
Uses “qualified” vs “non-qualified” categories
Often arbitrary and can overcharge on common card types
Opaque and difficult to audit
Subscription / IC++ Pricing
Subscription adds monthly fee for lower markup
IC++ includes interchange + assessments + markup in itemized format
Ideal for large-volume businesses
How Much You Could Save
Example 1: Debit Card Sales – $10,000 Volume (100 Transactions)
Flat Rate (2.5% + $0.10):
$250 + $10 = $260
Interchange Plus (0.5% + $0.22 interchange; 0.2% + $0.08 markup):
$50 + $22 + $20 + $8 = $100
Savings: $160/month
Example 2: Online Retailer – $10M Annually
Flat-Rate at 2.9% = $290,000
Interchange Plus ~2.1% = $210,000
Savings: $80,000/year
Example 3: Single $100 Credit Card Sale
Flat-Rate: $3.20
Interchange Plus: $2.31
Savings: $0.89 per transaction (28%)
Quick Savings Snapshot
Why It’s the Gold Standard
Total Transparency
Line-item detail per transaction
Easy to audit
Avoid hidden markups
Cost Efficiency
You only pay your negotiated markup
Small changes in markup = large savings
No tiered surprises or flat-rate premiums
Scalability & Market Responsiveness
Automatically benefits from changes to interchange rates
Grows with your volume without raising per-transaction costs
Best Practices to Maximize Savings
Negotiate both basis points and per-transaction fees
Avoid long contracts or bundled fee structures
Request and review monthly itemized statements
Regularly benchmark your processor against others
FAQs
What is interchange plus pricing?
It’s a merchant pricing model where you pay the exact interchange fee + assessment + a small, negotiable markup.
Is it cheaper than flat-rate?
Yes. You typically save 15–30% depending on card type, industry, and processing volume.
Who should use it?
It’s best for businesses processing over $5,000/month or any business that wants detailed transparency.
How do I negotiate my rate?
Ask for your markup in basis points (bps) and per-transaction cents, and get quotes from multiple providers.
What’s the difference between Interchange Plus and IC++?
IC++ shows all components—interchange, assessment, and markup—in a fully itemized format.
Conclusion
Interchange Plus offers unmatched transparency, savings, and control for merchants. It’s the professional pricing standard for businesses who value their margins.
If you’re still using flat-rate or tiered models, now’s the time to explore your savings potential. Ask your processor: “Can you offer interchange plus pricing?”
