Interchange-plus vs flat-rate pricing
The same sale can cost wildly different amounts depending on the pricing model. Here is what you actually pay under each, and when each one wins.
Two businesses can run the exact same sale and pay very different amounts, purely because of how their processor prices it. Pricing model is the single biggest lever on your effective rate that you actually control. Here is what each model really costs, with the math, so you can tell which one is quietly working against you.
Three ways to price the same swipe
Almost every processor uses one of three models. They can produce the same headline rate and wildly different bills.
| Model | How it works | Transparency |
|---|---|---|
| Interchange-plus | True network cost (interchange) + a fixed, disclosed markup | High: you see cost and markup separately |
| Tiered | Cards sorted into qualified / mid / non-qualified buckets you cannot audit | Low: the processor decides the buckets |
| Flat-rate | One blended percentage for every card, set above your costliest card | Medium: simple, but the markup is invisible |
The tell
What it actually costs
Take a card-present business running $50,000 a month, with a blended true interchange cost near 1.8%. Here is the same month under each model, using published, representative numbers.
Interchange-plus
1.8% interchange + 0.15% markup
Tiered (typical)
downgrades inflate the blended rate
Flat-rate (Square, published)
one rate for every card
On $50,000, the spread between interchange-plus and flat-rate is roughly $325 a month, near $3,900 a year, for accepting the exact same cards. The percentage gap looks small. The annual dollars do not.
Why the gap widens with volume
When each model actually wins
This is not religion. Each model has a real place.
- Flat-rate wins when you are brand new, very low volume, or want zero setup and predictable pricing while you find your feet.
- Interchange-plus wins for almost everyone doing steady volume, because you stop paying a premium on cards that cost the network very little.
- Tiered rarely wins anyone but the processor, because you cannot audit which bucket a card lands in.
The bottom line
- Pricing model is the biggest controllable lever on your effective rate.
- Interchange-plus shows cost and markup separately; flat-rate and tiered hide the markup.
- On real volume, flat-rate usually costs hundreds more per month for the identical cards.
- Flat-rate is fine to start; interchange-plus wins once you have steady volume.
- The only honest comparison is both models run against your own statement.
Sources & further reading
Figures cited as ranges or examples reflect publicly published network schedules and regulator filings at the time of writing. Card networks update interchange and fees periodically, usually each April and October, so always confirm against the current schedule.
- [1]Visa. Visa USA Interchange Reimbursement Fees – published interchange schedule
- [2]Mastercard. Merchant Interchange Rates
- [3]CardFellow. Interchange-plus vs tiered vs flat-rate pricing
- [4]Square. Square processing rates – published flat rates, verify current
Published competitor rates are quoted as of June 2026 and can change. This is general education, not financial advice. The only number that settles a comparison is your own effective rate. Send us a recent statement and we will compare it against your options, line by line.
Keep comparing
Compare it on your real numbers.
Models on a page are one thing. Send us one recent statement and we will show you, side by side, exactly what each option would cost you.