What Is Interchange Plus Pricing? Plain-English Guide
Most small business owners have never been shown what they're actually paying to accept credit cards.
Interchange-plus pricing is the structure that fixes that — and it's almost always cheaper than the flat rate or tiered plan a sales rep set you up with.
If you're running $20,000 a month or more in card volume, the difference between flat rate and interchange-plus is usually 0.4% to 1.0% off the top. On a $40,000-a-month operation, that's $2,000–$5,000 a year going to a processor instead of staying in your account.
This article walks through what interchange-plus pricing actually is, how it compares to the other two structures, and how to tell if you're overpaying right now.
The Short Answer
Interchange-plus pricing splits your processing fee into two parts you can actually see — the interchange cost the card networks (Visa, Mastercard, Discover, Amex) charge to move the money, and a flat markup your processor adds on top.
Both numbers show up on every statement.
Compare that to flat-rate (one blended percentage that hides the markup) or tiered pricing (three made-up categories — qualified, mid-qualified, non-qualified — built to bury fees).
Interchange-plus is the only structure where you can actually audit the bill.
How Interchange Actually Works
Every credit card transaction has three layers of cost:
Interchange — set by Visa, Mastercard, Discover, and Amex. Goes to the card-issuing bank. This is the biggest part of the fee, and no processor on earth controls it.
Assessments — a small percentage paid to the card networks themselves. Around 0.13–0.14% on most transactions. Also fixed.
Processor markup — what your processor charges to handle the transaction, settle the funds, and run the support side. This is the only part that's negotiable.
Interchange varies by card type. A basic debit card might be 0.05% + $0.22. A corporate rewards card can run 2.95% + $0.10.
That variation is why "blended" or "flat rate" pricing models exist. They average the high and low cards into one number — and pocket the difference.
Interchange-Plus vs Flat Rate vs Tiered
The three structures every small business sees, side by side:
Flat rate (Stripe, Square, PayPal)
What you pay: One blended percentage (~2.6% + $0.10 to 2.9% + $0.30)
What's hidden: The interchange split, the processor's actual margin
When it wins: Very low volume (under $5K/mo) or unpredictable card mix
Tiered (qualified / mid-qualified / non-qualified)
What you pay: Three made-up categories with different rates
What's hidden: Which transactions get downgraded and why
When it wins: Almost never. The industry has moved away from it.
Interchange-plus
What you pay: Real interchange + a fixed markup (e.g., I/C + 0.50%)
What's hidden: Nothing — it's all on the statement
When it wins: $15K+/mo volume, predictable card mix, owner who reads statements
Flat rate is the easiest to set up. That's its only real advantage.
Tiered pricing is the structure that built bad reputations for processors in the 2000s. Most newer accounts don't use it anymore — but if you're on a legacy plan, check.
Interchange-plus is what every operator I work with eventually moves to once they see the numbers side-by-side.
If you want a written breakdown of what your current pricing structure actually costs you, send three months of statements and I'll run the comparison — free, no pitch unless you ask.
When Interchange-Plus Makes Sense (and When It Doesn't)
Interchange-plus is the right call when:
Monthly card volume is $15,000 or more
Average ticket is $25 or higher (low-ticket merchants get hurt by the per-transaction fee on every card)
You're willing to read the statement — or work with someone who will
Your business has been around long enough to have a predictable card mix (debit, credit, rewards split is fairly stable month to month)
It's the wrong call when:
You're processing under $5,000/month with a small average ticket. The simplicity of flat rate is worth more than the savings.
You don't ever look at your merchant statement and don't plan to.
You're high-risk (peptides, nutraceuticals, gaming, etc.) — those pricing structures are different and processor-specific.
Most SMBs over $15K in monthly card volume save money on interchange-plus. Most. Not all.
Real Example — St. George, Utah HVAC Contractor
A residential HVAC contractor in St. George was on a flat-rate processor. Three trucks, mostly residential service work, occasional new-system installs.
Monthly card volume averaged $42,000.
His effective rate — the actual percentage of his sales going to processing — was 3.4%.
That wasn't because he was getting scammed. His average ticket was high (service-call minimum + parts), and a lot of his customers paid with rewards cards or corporate cards on installs. Flat-rate pricing charges the same blended percentage on every card. The cheap debit transactions and the expensive corporate-rewards transactions get averaged into one number that hides where the cost is actually coming from.
We pulled three months of statements, ran the numbers on interchange-plus, and moved him to interchange + 0.50%.
His new effective rate landed at 2.6%.
Savings: about $336 a month. About $4,000 a year.
Same volume. Same trucks. Same customers swiping the same cards. Just better pricing structure.
How to Tell If You're Overpaying
Three things to check on your most recent merchant statement:
Effective rate. Take total fees ÷ total card volume. If you're over 2.9% and you're not in a high-risk category, you're probably overpaying.
Pricing model. If your statement says "qualified / mid-qualified / non-qualified," that's tiered. It's almost always more expensive than interchange-plus.
Markup transparency. If you can't tell how much your processor is making versus what's going to Visa/Mastercard, you're on a structure designed to hide the markup.
If any of those three apply, an interchange-plus comparison is worth running. Even if the answer turns out to be "you're already in a fair spot," at least you'll know.
What to Do Next
Pull your last three months of merchant statements. That's all you need.
I'll come back with a written analysis — your effective rate, where the fees are coming from, and what an interchange-plus structure would look like for your specific card mix.
No pitch unless you ask. No follow-up sequence. No charge.
If you're already on interchange-plus and the markup is fair, I'll tell you that too — and you can keep what you have.
Want a Free Audit of Your Current Merchant Statement?
Send the last three months and I'll come back with a written analysis — where you're overpaying, what your effective rate actually is, and what a competitive interchange-plus structure would look like for your business. No pitch unless you ask. No charge.
Send your statement directly →
— Jeff Glines
Payment processing consultant for SMBs
MerchaMax · St. George, Utah
