Flat rate vs. interchange-plus, in plain terms

The two ways processors price you, and why neither is universally cheaper.

Almost every card processing quote is priced one of two ways: flat rate or interchange-plus. The names sound technical, but the difference is simple once you see it laid out, and it's the whole reason this site's calculator asks for your numbers instead of publishing one verdict for everyone.

Flat rate: one number, no matter the card

A flat-rate plan charges the same percentage of the sale, plus a fixed fee per transaction, regardless of which card the customer used. A $50 purchase on a plain debit card and a $50 purchase on a rewards credit card cost you the same amount to process. The processor is absorbing (or passing on to you as an average) the fact that some cards genuinely cost more to accept than others.

The appeal is predictability: one rate to quote, one rate to compare between offers, no statement full of category codes to decode. The trade-off is that the rate has to be set high enough, on average, to cover the more expensive cards mixed in with the cheap ones — so a business whose cards skew cheap-to-accept is effectively subsidising the ones whose cards don't.

Interchange-plus: the wholesale cost, then a visible markup

An interchange-plus plan splits the fee into two parts and shows you both. The first part is interchange: the fee set by the card networks and paid to the customer's card-issuing bank, which is not one number — it varies by card type, by whether the card was swiped/tapped or typed in online, and by a few other factors the networks publish in lengthy schedules a few times a year. The second part is the processor's markup: an explicit percentage and small per-transaction fee added on top, which is the processor's actual margin.

Because interchange itself moves with your card mix, an interchange-plus bill is less predictable line to line than a flat rate — but the markup is disclosed separately, so you can see exactly what the processor is charging you for its own service versus what it is simply passing through.

There is no universally cheaper option

Which structure costs less depends on your own volume, your average transaction size, and the specific terms you're quoted — not on which structure is "better" in the abstract. A lot of what gets published about this comparison online comes from one side of the transaction: a processor's own calculator built to show you're overpaying your current provider, or a comparison page whose table exists to route you toward one of the processors it lists. That doesn't make the numbers on those pages wrong, but it's worth knowing who built the tool before trusting its conclusion.

This calculator runs the same arithmetic for both structures on your own numbers and shows both results side by side — it doesn't have a preferred answer. See how your average ticket size changes which one wins, or go try it with your own numbers.