Most small businesses start on flat-rate pricing because it's simple. As volume grows, interchange-plus usually becomes worth a look. Here's how each one works and how to tell which is cheaper for you.
What interchange is
Every card transaction carries a wholesale cost set by the card networks, mostly paid to the bank that issued the card. That cost, called interchange, varies with the card type (debit, rewards, business), how it was accepted (tapped vs. keyed) and the type of business. The networks also charge small assessment fees.
Flat rate
Flat-rate providers charge one percentage plus a fixed fee on every transaction, no matter what the interchange actually was. You pay the same on a low-cost debit card as on a premium rewards card. That's simple, but the provider sets the flat rate high enough to cover expensive cards.
Interchange-plus
With interchange-plus, you pay the actual interchange and assessments for each transaction, plus a fixed markup (for example, a percentage and a few cents). The markup is the only part the provider controls, so it's easy to compare quotes and see whether your price changed.
Want someone to check your numbers?
Send one recent statement and get a plain-English breakdown of every fee, with options side by side. Free, no obligation.
When each one wins
Flat rate tends to make sense for low or unpredictable volume. Interchange-plus tends to win as volume grows, when average tickets are larger, and when customers use a lot of debit. Businesses taking B2B cards can gain even more with Level 2 and Level 3 data.
Run your own numbers
Use the interchange-plus vs. flat rate calculator with your volume and ticket size. For a precise comparison, a statement analysis uses your real card mix.
And a third option
A cash discount or dual pricing program is a different approach: instead of lowering the rate, it builds the cost into the card price.
General information only, not legal, tax or financial advice. Rates and rules change; confirm current details before acting.