When it comes to credit card processing, the pricing model you choose can make a significant difference in your monthly costs. The two most widely discussed models are interchange-plus and flat-rate pricing — and they are not created equal. Understanding how each works, and when each makes sense, is essential for any business owner who wants to keep more of their revenue.
What Is Flat-Rate Pricing?
Flat-rate pricing bundles the card network's interchange fee, assessment fees, and the processor's markup into a single, predictable percentage. You pay the same rate regardless of what type of card your customer uses.
The appeal of flat-rate pricing is simplicity. You always know what you will pay per transaction, which makes bookkeeping straightforward. However, this simplicity comes at a cost: the processor is charging you a premium rate on every transaction, including low-cost debit cards and basic consumer credit cards that would cost far less under interchange-plus pricing.
What Is Interchange-Plus Pricing?
Interchange-plus pricing separates the card network's actual interchange fee from the processor's markup. You pay the real interchange rate — which varies by card type, transaction method, and merchant category — plus a fixed, transparent markup that the processor charges for their services.
For example, a processor might charge "interchange + a small fixed markup per transaction." If a customer pays with a standard consumer credit card, you pay that card's actual interchange rate plus the markup. If that same customer pays with a debit card — which carries a much lower interchange rate — your total cost drops dramatically.
This transparency is the defining advantage of interchange-plus pricing. You can see exactly what the card networks charge versus what your processor charges, and you can hold your processor accountable for their markup.
A Side-by-Side Comparison
| Factor | Flat-Rate | Interchange-Plus |
|---|---|---|
| Predictability | High — same rate every time | Moderate — varies by card type |
| Transparency | Low — markup hidden in blended rate | High — costs fully itemized |
| Cost for debit cards | High — charged at full flat rate | Low — debit interchange is much lower |
| Cost for rewards cards | Moderate — capped at flat rate | Moderate — rewards cards carry higher interchange |
| Best for | Very low volume or new businesses | Businesses processing $5,000+/month |
| Typical monthly savings vs flat rate | — | Significant for most businesses |
Which Is Right for Your Business?
For very low-volume or brand-new businesses, flat-rate pricing is often the simpler and more cost-competitive choice. The savings from interchange-plus are real but modest at low volumes, and the simplicity of a flat rate has genuine value.
For businesses with meaningful monthly volume, interchange-plus almost always wins. The savings compound quickly, especially if your customer base uses a mix of debit cards and basic credit cards that carry lower interchange rates than premium rewards cards.
There is also a third model worth knowing: subscription pricing, where you pay a flat monthly membership fee and then pay interchange at cost plus a small per-transaction fee. For high-volume businesses, this can be the most cost-effective option of all.
The Real Cost of Flat-Rate Pricing at Scale
The savings from switching to interchange-plus can be substantial for a high-volume business. Your actual savings will depend on your card mix, average ticket size, and the specific rate you negotiate. The best way to get an accurate picture is to have a qualified processor analyze your current statement.
Want to see what you would save? Request a statement review — our Utah team will give you a clear, honest comparison with no obligation.