Interchange-plus pricing, explained without the sales pitch
Interchange-plus is the most transparent way to buy card processing. It is also routinely sold with claims it cannot support. This page separates the two.
The three layers you are always paying
Every card transaction costs three things, regardless of how your processor writes the invoice.
| Layer | Goes to | Set by | Negotiable |
|---|---|---|---|
| Interchange | The customer's bank | The card networks | No |
| Assessments | Visa / Mastercard | The card networks | No |
| Markup | Your processor | Your processor | Yes |
Interchange is the largest piece — commonly 1.4% to 2.7% depending on card type and channel — and it is identical for every merchant on the same transaction. Assessment adds roughly 0.14% for Visa and 0.13% to 0.14% for Mastercard. Only the third layer is a price you can argue about.
What “interchange-plus” literally means on a statement
Under interchange-plus, you are billed the actual interchange rate for each transaction, plus the assessment, plus a stated markup. Because the first two were going to be at that level no matter who processed you, the entire comparison between two interchange-plus providers collapses to one question:
A quote of “interchange + 0.50% + 25¢” means exactly that. If your card mix carries 1.85% interchange and 0.14% assessments, your transaction cost is 2.49% + 25¢. At a $50 ticket that is $1.495, an effective rate of 2.99%.
Why it costs more at small tickets
This is the part that gets skipped, and it is not a corner case.
Flat-rate pricing bundles a percentage and a fixed fee into one number. Interchange-plus separates them, and the per-transaction piece is usually larger in the markup than the flat rate's fixed fee, because the markup has to fund the same infrastructure across a smaller spread.
The two pricing lines cross at a specific average ticket. Below it, interchange-plus is more expensive — even though its headline percentage is much lower.
| Average ticket | Flat 2.9% + 30¢ | IP 2.35% + 35¢ | Difference |
|---|---|---|---|
| $5 | $0.445 (8.90%) | $0.468 (9.35%) | −$0.023 / txn |
| $10 | $0.590 (5.90%) | $0.585 (5.85%) | ≈ level |
| $20 | $0.880 (4.40%) | $0.820 (4.10%) | +$0.060 / txn |
| $50 | $1.750 (3.50%) | $1.525 (3.05%) | +$0.225 / txn |
| $100 | $3.200 (3.20%) | $2.700 (2.70%) | +$0.500 / txn |
| $200 | $6.100 (3.05%) | $5.050 (2.53%) | +$1.050 / txn |
The break-even in that comparison is $9.09. A coffee shop at $6 average tickets loses money on this “upgrade” — 1.7¢ per sale. A furniture store at $400 wins $2.15 per sale — a hundred and twenty times more, on the same quote. The quote did not change. The ticket did.
Four offer shapes that are called interchange-plus but aren't
1. Tiered / “qualified” pricing
A statement with lines like “qualified”, “mid-qualified”, “non-qualified” is not interchange-plus. The processor decides which tier a transaction lands in, and the rate on the non-qualified tier is where the margin hides. If the statement does not print the actual interchange rate per transaction, it is not interchange-plus.
2. “Zero percent” processing
Usually a cash-discount or surcharge programme, where the customer pays the fee instead of you. That can be legitimate and legal in many US states, but it is a pricing change to your customers, not a reduction in your cost. It also carries card-network rules and state-level compliance requirements that vary. It is not the same product.
3. Flat monthly subscription with no percentage
Example: $99 a month plus interchange and a small per-transaction fee. This is a legitimate model and can be excellent for high volume. It is terrible for low volume, because the subscription is a fixed cost that volume has to absorb. The break-even is arithmetic: monthly fee ÷ basis-point saving.
| Monthly fee | Saving vs current | Volume needed to break even |
|---|---|---|
| $15 | 30 bp | $5,000 / mo |
| $20 | 55 bp | $3,636 / mo |
| $25 | 55 bp | $4,545 / mo |
| $99 | 105 bp | $9,429 / mo |
4. “We'll beat your rate by 10%”
Ten percent of what? If it is ten percent of the effective rate, that is a real 20-to-35 basis point cut and worth considering. If it is ten percent of the markup, it is a rounding error dressed as a discount. Ask which, in writing.
What to ask for, in this order
- The markup in basis points, the per-transaction markup in cents, and every monthly fee — on one line, all three numbers.
- A sample statement showing actual interchange per transaction, not a tier label.
- Contract length, early termination fee, and whether rates can be raised mid-term. These are frequently larger than the savings.
- PCI fee, monthly minimum, batch fee, chargeback fee — itemised, since these are where a low markup gets recovered.
Then put the whole thing into the calculator with your own volume and ticket size, and check the monthly fee break-even before signing. The number that matters is annual dollars, not basis points — and for small tickets they point in opposite directions.
Last reviewed 30 October 2026. Interchange is republished twice a year, in April and October.