If you accept credit card payments, you've probably heard terms like “flat rate,” “tiered pricing,” and “interchange-plus.”

While they may sound like industry jargon, understanding the differences between these pricing models can have a major impact on your bottom line.

In this post, we’ll break down what interchange-plus pricing is, how it works, and why it can save your business more money over time compared to other models.

What Is Interchange-Plus Pricing?

Interchange-plus pricing (sometimes called “cost-plus”) separates your processing fees into two parts:

1. Interchange Fee – A fixed fee set by the card networks (Visa, Mastercard, etc.) based on card type, transaction method, and industry.
2. Processor Markup – A fixed percentage or per-transaction fee added by your payment processor.

Example:

If the interchange fee for a transaction is 1.65% and your processor charges 0.25% + $0.10, your total cost is:
1.65% + 0.25% + $0.10 = 1.90% + $0.10 per transaction

The key benefit? Full transparency. You can see exactly what the card networks charge and what your processor is earning.

How It Compares to Other Pricing Models

🟥 Flat Rate Pricing

Flat rate pricing charges a fixed percentage (e.g., 2.9% + $0.30), no matter the type of card used. While it's simple, it often results in overpaying, especially on debit or rewards cards with lower interchange rates.

🟨 Tiered Pricing

Tiered pricing groups transactions into categories (qualified, mid-qualified, and non-qualified) with different rates. This model can be confusing and unpredictable, as many transactions end up in higher-priced tiers without clear reason.

🟩 Interchange-Plus Pricing

• Transparent and itemized
• Typically lower cost for businesses with moderate to high volume
• Easier to audit and optimize
• No surprises

5 Reasons Interchange-Plus Saves You Money Long-Term

1. Transparent Fee Structure

With interchange-plus, you know exactly what you're paying and to whom. There's no hiding markup in blended rates, and you can easily track what types of cards are costing you more.

2. Lower Costs on Debit and Regulated Cards

Debit and PIN-based transactions typically have much lower interchange rates. With flat rate pricing, you pay the same high fee regardless. Interchange-plus passes the savings directly to you.

3. Scales with Your Business

As your volume grows or your average transaction size increases, interchange-plus pricing becomes more cost-effective—especially if you're negotiating your processor markup.

4. Helps You Spot Cost-Saving Opportunities

Because every fee is itemized, you can analyze your statement to see:

• Which cards are most expensive
• Which methods (swipe, chip, online) are more cost-effective
• Whether dual pricing or surcharging could reduce your net costs even further

5. No Tier Surprises or Rate Creep

Unlike tiered pricing, interchange-plus doesn’t “reclassify” transactions into higher-cost tiers without explanation. You’ll never wonder why you’re being charged 3.5% on a basic Visa card.

Who Should Use Interchange-Plus Pricing?

Interchange-plus is especially beneficial for:

• Businesses processing over $10,000/month
• Retailers or service businesses with high average tickets
• Merchants who want full visibility into costs
• Anyone tired of confusing, opaque statements

While flat rate pricing may look simple on the surface, interchange-plus pricing often results in significant savings over time. Especially for businesses that process a moderate to high volume of card transactions.

Want to see how much you could save with interchange-plus pricing?
Send us your current merchant statement, and a Beacon Payments specialist will review it for free. No obligation, just honest insights.