Interchange-plus vs flat rate

What every card payment actually costs

Every pricing model is a different way of packaging the same three layers of cost:

1. Interchange. Paid to the bank that issued your customer's card. Visa and Mastercard publish the rate tables, and the rate depends on the card type (debit, prepaid, rewards credit, commercial), how it was accepted (tapped, keyed in, online) and sometimes your industry. It is the same whichever processor you use.
2. Network (assessment) fees. Charged by the card networks for using their rails. They are smaller than interchange, but there are several of them, and some are charged per transaction.
3. Processor markup. What your processor, and any sales agent or ISO, keeps. This is the only layer that is truly negotiable, and it is the layer each pricing model shows or hides differently.

Interchange is not one number. Here are a few rows from Visa's own U.S. schedule to show how much it moves:

Source: Visa USA Interchange Reimbursement Fees, rates effective April 18, 2026, checked 2026-09-14. "Regulated" means debit cards from issuers covered by the Federal Reserve's Regulation II; "exempt" generally means smaller issuers. Rates change, usually in April and October, so check the current schedule before relying on any figure.

So on the same $100 tapped in-store sale, interchange can cost about $0.26 on a regulated debit card or about $2.40 on a top-tier rewards credit card. How your pricing model handles that gap decides most of what you pay.

The four pricing models

Flat rate (blended)

You pay one published rate per transaction type, whatever card the customer uses. The provider takes the risk that interchange varies and builds a margin in to cover it. Debit transactions that cost the provider little are billed at the same rate as premium rewards cards.

Here are published U.S. examples, checked 2026-09-14 on each provider's own pricing page:

• Square: in person 2.6% + 15¢ (Free plan), 2.5% + 15¢ (Plus), 2.4% + 15¢ (Premium). Online 3.3% + 30¢ (Free) or 2.9% + 30¢ (Plus and Premium). Manual entry or card on file 3.5% + 15¢.
• PayPal: standard credit and debit card payments 2.99% + $0.49; PayPal Checkout 3.49% + $0.49; in-person (point of sale) 2.29% + $0.09.

Stripe's U.S. pricing page could not be loaded from the U.S. version during our check, so we have not quoted U.S. Stripe rates. Its Canadian rates are listed in the Canada section below.

Interchange-plus (cost-plus)

Interchange and network fees are passed through at cost, line by line, and the processor adds a fixed, disclosed markup. That markup is usually written as a percentage in basis points plus a per-item fee (100 basis points = 1%). A quote might read "interchange + 0.20% + $0.10", but that is only a format example, not a recommended or typical rate.

Because the pass-through portion can be checked against the networks' published tables, interchange-plus is the most auditable model. The downside is a longer statement and a monthly cost that moves with your card mix.

Tiered

Transactions are sorted into buckets, usually "qualified", "mid-qualified" and "non-qualified", each with its own rate. The processor writes the rules for which transactions land in each bucket. The headline "qualified" rate is often the lowest, while rewards cards, keyed-in sales or online orders may be billed at the higher tiers. Because the statement shows tiers rather than interchange categories, you cannot easily see the markup.

Subscription (membership)

You pay a fixed monthly fee, and transactions are billed at interchange and network cost plus a small per-transaction fee, with little or no percentage markup. This can work well for businesses with high volume and large tickets, because the processor's margin does not grow with the sale amount. For low-volume months, though, the fixed fee can be a large share of the total.

Comparison table

Illustrative example: flat rate vs interchange-plus

Illustrative example only. The numbers below are hypothetical round numbers chosen to show the arithmetic. They are not typical or average costs, and they do not predict savings for any business. Your result depends on your own card mix and quotes.

Imagine a shop with $20,000 in monthly card sales across 400 transactions (a $50 average ticket), all tapped or dipped in person.

The flat-rate figure is exact because the price is fixed. The interchange-plus total rests entirely on the 1.80% cost assumption. Change the card mix and the result changes. If most customers used premium rewards cards and interchange-plus-network came to 2.50% ($500), the interchange-plus total would be $580, the same as flat rate. Add a $25 monthly statement fee and flat rate would come out ahead.

Now try small tickets. The same $20,000 spread across 2,000 transactions of $10 costs $520 + $300 = $820 at 2.6% + $0.15, an effective rate of 4.10%. When tickets are small, the per-item fee matters more than the percentage in every model.

How to calculate your effective rate from a statement

1. Find total card sales (sometimes labelled gross volume or amount submitted) for one statement month.
2. Find total fees for the same month. Include everything: discount or percentage fees, per-item fees, interchange and network pass-throughs, monthly, statement, PCI, gateway and equipment fees. Some processors deduct fees daily and others once a month, so check both the summary and the fee detail pages.
3. Divide total fees by total card sales and multiply by 100. For example, $500 in fees on $20,000 in sales is a 2.50% effective rate.
4. Repeat for three months. A single month can be skewed by an annual fee, a chargeback or an unusual card mix.

The effective rate tells you what you paid. It does not tell you whether you were overcharged, because a business taking mostly rewards cards online will have a higher effective rate than a grocery store taking debit, even at an identical markup. To judge pricing, separate the pass-through costs from the markup. Our guide to reading a merchant statement walks through each section.

How to judge an interchange-plus markup

People search for "what is a good interchange-plus rate", but the honest answer is that the only fair comparison is markup against markup, on the same statement.

• Compare the markup, not the effective rate. Ask each provider for the basis points and per-item fee they add on top of interchange and network fees, then apply each quote to the same month of your volume and transaction count.
• Price both parts together. A lower percentage with a higher per-item fee can cost more if your tickets are small. Run the numbers on your own average ticket.
• Count the fixed fees. Monthly, statement, PCI, gateway, batch and terminal fees belong in the comparison, even when they sit outside the quoted markup.
• Check that pass-throughs really pass through. Pick a few interchange lines on your statement and compare them with the network's published rate for that category. If they are higher, margin has been added to what is billed as cost.

When flat rate is genuinely the better choice

Flat rate is not a trap. It is often the right answer when:

• You are just starting out, your volume is low or seasonal, and a monthly minimum or fixed fee would cost more than any saving.
• Predictability matters more to you than the last fraction of a percent, and you do not want to review a detailed statement.
• You need an all-in-one setup (hardware, point of sale, online store, invoicing) fast, with no long contract.
• The quoted interchange-plus deal comes with monthly fees, an equipment lease or an early termination fee that cancels out the lower markup.

As volume grows, it is worth re-pricing once a year. The flat-rate providers above note that larger businesses can ask about custom pricing, and Stripe lists IC+ as a custom-pricing option.

Questions to ask any provider

1. Which pricing model is this, and is it written into the agreement?
2. What is the markup, in basis points and per-item fee, above interchange and network fees?
3. Are interchange and network fees passed through at exactly the published rate?
4. What monthly, annual, PCI, statement, gateway and chargeback fees apply?
5. How much notice do I get before a fee increase, and can I leave without penalty if fees go up?
6. Is there a contract term, early termination fee or equipment lease?
7. Can you price this proposal against my last three statements?

US vs Canada notes

United States

• Debit interchange from large issuers is capped under the Federal Reserve's Regulation II. That is why Visa's schedule lists "regulated" and "exempt" debit rates separately, and why heavy debit volume can make pass-through pricing more attractive. See how the Regulation II debit cap works.
• Visa and Mastercard each publish U.S. interchange schedules, which are usually updated in April and October. Our guide to reading Visa's US interchange schedule walks through the current document.

Canada

• Interac debit is a separate network from Visa and Mastercard credit, and providers usually price it as a flat per-transaction fee. Stripe Canada, for example, lists CA$0.15 per in-person Interac transaction (checked 2026-09-14).
• Stripe Canada's published standard rates are 2.9% + CA$0.30 for domestic cards online and 2.7% + CA$0.05 for most cards in person, with IC+ offered through custom pricing (checked 2026-09-14).
• Visa Canada publishes its Canadian interchange rates and network assessment fees on visa.ca and states that it follows a voluntary commitment with the Department of Finance to keep domestic consumer credit interchange at an average of 1.40%. That figure is an average across cards, not the rate on any one transaction.
• The Code of Conduct for the Payment Card Industry in Canada, overseen by the Financial Consumer Agency of Canada, requires 30 to 60 calendar days' notice before fee increases. It also lets merchants cancel without penalty within 70 calendar days of a fee change, and requires statements to show the effective merchant discount rate, interchange and network assessment rates and amounts, and transaction counts and volumes by payment type. It also allows merchants to offer different discounts for different payment methods and card networks.

How we help

CELER Merchants is an independent agent, not a processor. We take your statement to several providers and put their quotes side by side as markup over cost. We will also tell you when your current flat rate is already the better deal.

Run a quick estimate, or send a statement for a line-by-line comparison.

Card brand names are trademarks of their respective owners and are used here for identification only. Rates and terms change; confirm current pricing with each provider before deciding.