Merchant Services Solutions
If you've ever looked at your processing statement and wondered where your money is actually going, interchange plus pricing was built for you. It's one of the most transparent credit card processing models available and it's the pricing structure Beacon Payments uses with every merchant we work with.
Understanding your processing costs starts with understanding interchange plus pricing. Here we break down how it works, how it compares to other pricing models, and what separates a competitive processor from one that's quietly costing you more.
What Is Interchange‑Plus Pricing?
Interchange plus pricing, sometimes called cost-plus or pass-through pricing, is a credit card processing model that separates the true cost of accepting a card payment from your processor's markup. Instead of bundling everything into a single blended rate, every charge on your statement is broken out into its individual components.
There are three parts to every interchange plus transaction:
- Interchange fee: Set by the card networks (Visa, Mastercard, Discover, and American Express) and paid to the cardholder's issuing bank. These fees are non-negotiable and the same regardless of which processor you use.
- Assessment fee: A small percentage charged by the card network itself for facilitating the transaction.
- Processor markup: A flat, transparent fee added by your payment processor. This is the only part of your costs that varies by provider, and the only part you can negotiate.
The core advantage of interchange plus pricing is transparency. With bundled pricing models, processors can obscure how much they're actually earning on your account. With interchange plus, your markup is clearly disclosed you see exactly what the card networks charge and exactly what your processor earns.
How Does Interchange Plus Pricing Work?
The total cost of each transaction is simply the interchange fee for that card type plus your processor's fixed markup. It sounds straightforward because it is.
The variable part is interchange. Interchange rates are set by the card networks and differ based on several factors:
- Card type: Debit cards carry lower interchange rates than credit cards. Rewards, travel, and business credit cards typically carry higher rates.
- Transaction method: Card-present transactions (chip, tap, swipe) carry lower rates than card-not-present transactions (online, keyed-in) because they present less fraud risk.
- Industry: Card networks assign each business a Merchant Category Code (MCC), and interchange rates vary by category.
- Card brand: Visa, Mastercard, Discover, and American Express each set their own interchange schedules.
Because interchange fluctuates based on your transaction mix, your total processing costs will vary month to month. A month with more debit card transactions will generally cost less than one with more premium rewards cards. This is one reason interchange plus pricing rewards businesses that understand their transaction mix and why visibility into that mix matters.
Your processor markup, by contrast, is fixed. At Beacon Payments, our markup is flat, fully disclosed, and the same across every transaction so the only variable in your monthly costs is the interchange itself.
What Are the Differences Between Interchange Plus and Flat Rate Pricing?
Flat rate pricing appeals to businesses that want simplicity one rate, no surprises on the statement. But simplicity comes at a cost. When a processor charges 2.9% + $0.30 on every transaction, they're charging you that same rate on a $20 debit card purchase that might only cost 0.80% + $0.15 in actual interchange. The difference is profit for the processor, not a fee you owe.
Interchange plus pricing removes that padding. You pay the actual cost of each transaction plus a disclosed markup and nothing more.
Is Interchange Plus Better Than Flate Rate?
For most businesses that process a moderate to high volume of card transactions, yes interchange plus pricing is the better choice. Here's why:
- You pay actual costs, not averaged costs. Flat rate processors average the cost of all card types into one rate. With interchange plus, lower-cost transactions (like debit or in-person chip transactions) are priced at their actual, lower interchange rate which means you're not subsidizing the processor's risk margin on every sale.
- You maintain full cost visibility. Every line on your interchange plus statement is traceable. You can see what each card type costs, what your processor earns, and where your money is going. Flat rate pricing makes that impossible.
- You can audit and verify your charges. Because fees are itemized, it's straightforward to confirm your processor is billing you correctly. With blended pricing, there's no clean way to verify accuracy.
- Savings scale with volume. The more transactions you process, the more the cost difference between interchange plus and flat rate compounds. Businesses that have switched to Beacon Payments' interchange plus model have reported savings of 20 to 30 percent annually compared to their previous flat rate processors.
- Your markup is negotiable. With flat rate pricing, the rate is the rate. With interchange plus, the processor markup is the variable and a competitive processor will offer a fair, transparent markup that you can compare across providers.
That said, flat rate pricing isn't always the wrong choice. If your business processes very low card volumes, the simplicity of one predictable rate may outweigh the savings potential of interchange plus. The key is running the numbers for your specific transaction mix.
Interchange Plus Versus Flat Rate Versus Tiered Pricing
| Pricing Model | Transparency | Flexibility | Savings Potential | Best for |
|---|---|---|---|---|
| Flat Rate | Low | Low | Limited | micro-merchants or simple needs |
| Tiered Pricing | Medium | Low | unpredictable | Traditional Setups |
| Interchange-Plus | High | High | strong | Any business seeking cost control |
What Is a Good Interchange Plus Rate
Interchange rates themselves are set by the card networks and are the same no matter which processor you use so the rate you're evaluating is your processor's markup on top of interchange. That's where the meaningful differences between providers show up.
A competitive interchange plus markup typically looks like a small percentage plus a flat per-transaction fee. Beacon Payments, for example, lists its standard markup at interchange plus 0.05% and $0.22 per transaction well below what many processors charge.
When evaluating what constitutes a good rate, keep these factors in mind:
- Lower markups indicate more competitive pricing but always look at the total picture, including monthly fees, gateway fees, batch fees, and any other line items.
- Rates can vary by industry and risk profile higher-risk merchant categories may carry higher markups regardless of processor.
- Transaction volume matters higher-volume businesses often have more leverage to negotiate favorable markup terms.
- Evaluate total cost, not just headline rates a processor advertising a low markup but charging high monthly or gateway fees may not be the best deal overall.
The most reliable way to compare processors is to send your current processing statement to a prospective processor and ask for a line-by-line cost analysis. Beacon Payments offers free statement reviews with no obligation so you can see exactly what you'd save before making any decisions.
Interchange Plus Pricing Example
Here's a simple example of how interchange plus pricing calculates the total cost of a transaction, compared to what a flat rate model would charge for the same sale.
Scenario: A customer pays $100 with a standard Visa consumer credit card, using a chip reader in your store.
How interchange plus pricing works — example: $100 sale, Visa consumer credit card, chip transaction
Interchange fee Set by card networks 1.51% + $0.10 = $1.61 on $100 | + | Assessment fee Charged by network ~0.14% = $0.14 on $100 | + | Processor markup Beacon Payments fee 0.05% + $0.22 = $0.27 on $100 | = | Total cost You pay $2.02 on a $100 sale |
Interchange plus vs. flat rate — same $100 transaction
Same $100 sale Flat rate pricing 2.9% + $0.30 blended, no breakdown | = | Total cost You pay $3.20 on a $100 sale | vs. | Interchange plus Beacon Payments $2.02 on a $100 sale | = | You save $1.18 per $100 transaction vs. flat rate |
In this example, interchange plus pricing saves $1.18 on a single $100 transaction. At 500 transactions per month, that's a potential savings of $590 monthly or over $7,000 annually from the pricing model alone, before any markup negotiation.
Now consider a debit card transaction for the same $100. Debit interchange rates are significantly lower (often 0.80% + $0.15 or less for regulated debit). With interchange plus, you pay that lower rate. With flat rate pricing, you pay 2.9% + $0.30 regardless.
Benefits of Interchange Plus Pricing
Interchange plus pricing consistently delivers advantages that other pricing models can't match. Here's what merchants experience after making the switch:
Every charge on your monthly statement is broken out interchange fees by card type, assessment fees, and your processor's markup. There are no blended rates obscuring what you actually owe, and no line items you can't explain. This level of visibility is simply not possible with flat rate or tiered pricing models.
Because you pay the actual cost of each transaction rather than a padded blended rate, interchange plus pricing typically results in lower overall processing costs especially for businesses with significant debit card or in-person chip transaction volume. Beacon Payments clients have reported average savings of 20 to 30 percent annually compared to their previous processors.
With itemized statements, confirming your processor is billing you correctly is straightforward. You can cross-reference interchange rates against published card network schedules, verify that your markup matches your agreement, and catch any discrepancies quickly. This kind of auditability is a significant advantage for businesses with active finance or accounting oversight.
As your transaction volume grows, the advantages of interchange plus pricing compound. Higher volume means more transactions where the cost difference between actual interchange and padded flat rates adds up. For growing businesses, staying on interchange plus pricing from the start avoids the costly transition away from bundled pricing later.
Interchange plus pricing gives merchants access to the same wholesale cost structure that large enterprise businesses have always used. Small and mid-sized businesses no longer have to overpay for the privilege of accepting credit cards transparent pricing is available at any volume.
How to Choose the Right Payment Processor
Not all processors who advertise interchange plus pricing deliver it the same way. Here's what to look for when evaluating your options:
Some processors advertise interchange plus pricing but still apply tiered structures or reclassify transactions in ways that inflate your costs. Ask for a sample statement and verify that every charge is itemized interchange, assessment, and markup before signing anything.
The markup is the one component you can negotiate, so compare it across providers. Look at both the percentage and the per-transaction fee together, not just the headline percentage. A lower percentage with a high per-transaction fee can actually cost more for lower-ticket businesses.
Monthly fees, gateway fees, batch fees, PCI compliance fees, and early termination fees all affect your total cost of processing. A competitive markup paired with excessive ancillary fees may not be the best deal. Request a full fee schedule and review contract terms carefully.
A processor committed to transparency should provide detailed monthly statements that clearly break out every fee category, along with reporting tools that let you monitor your transaction mix, identify cost trends, and catch anomalies. If a processor's reporting makes it difficult to understand your costs, that's a red flag.
Your payment processor is a long-term partner. Look for US-based support that's available when you need it, a technology platform that can grow with your business, and a team that proactively helps you stay compliant and optimized.
Get a Free Statement Review
If you'd like help evaluating your current processing costs, Beacon Payments offers a free statement review with no obligation. Our team will analyze your existing statement line by line and show you exactly what you're paying, what you could be paying, and whether switching makes sense for your business.
Contact Us to learn more.
Frequently Asked Questions
Interchange plus pricing covers the three core components of every transaction: the interchange fee, the card network assessment fee, and your processor's markup. Fees that are typically separate from the per-transaction interchange plus structure include monthly service fees, payment gateway fees, batch settlement fees, PCI compliance fees, chargeback fees, and any equipment or software costs. When evaluating a processor, always request a complete fee schedule not just the interchange plus markup rate so you have a full picture of your monthly costs.
The interchange portion of your costs is set by the card networks (Visa, Mastercard, Discover, and American Express) and is updated periodically typically twice per year, in April and October. These updates are published by the card networks and apply to all processors equally; no processor can negotiate interchange on your behalf. Your processor markup, by contrast, is set by your contract and does not change unless you renegotiate or your contract terms specify otherwise. A transparent processor will notify you of any changes to fees within their control well in advance.
The interchange fee itself is fixed and non-negotiable it's the same for every merchant regardless of processor. What can be customized is your processor markup. Depending on your transaction volume, industry, and business profile, you may be able to negotiate a lower markup rate with your processor. Businesses that process higher volumes or present lower risk profiles typically have more leverage in these conversations. Beacon Payments works with merchants across a wide range of industries and volume levels to build pricing that reflects their actual cost structure.
A processor offering true interchange plus pricing should provide detailed monthly statements that itemize every fee by category interchange, assessments, and markup along with a summary of your transaction mix by card type and transaction method. Beyond statements, look for an online reporting dashboard where you can monitor transaction volume, average ticket size, card type breakdowns, and monthly cost trends in real time. These tools are what make interchange plus pricing actionable without them, you have transparency on paper but no practical way to use it.
Start by pulling the published interchange rate schedules directly from Visa and Mastercard's websites these are publicly available and list every interchange category and corresponding rate. Then compare those rates against what appears on your statement for each transaction type. Your processor markup should be exactly what's specified in your contract, applied consistently. If you see rates that don't match published interchange, or markup charges that differ from your agreement, contact your processor immediately for an explanation. Beacon Payments encourages merchants to review their statements regularly and will walk through any line item with you directly.