If you accept credit cards, you've probably wondered: should I stick with simple flat-rate pricing (like Square's 2.6% + 10¢) or switch to interchange plus?
The answer could save you thousands of dollars per year.
Understanding the Three Pricing Models
1. Flat Rate Pricing
Examples: Square (2.6% + 10¢), Stripe (2.9% + 30¢), PayPal (2.99% + 49¢)
Pros: Simple, predictable, no monthly fees, easy to understand
Cons: Overpay on debit cards, no negotiation room, higher overall cost
2. Tiered Pricing
Transactions sorted into 'Qualified,' 'Mid-Qualified,' and 'Non-Qualified' tiers.
Cons: Processors decide which tier your transactions fall into. Most end up in expensive tiers. AVOID this model.
3. Interchange Plus Pricing
You pay the actual interchange rate (set by Visa/Mastercard) plus a fixed markup.
Example: Interchange + 0.25% + $0.10
Pros: Complete transparency, lowest overall cost for most businesses, saves 15-30% vs flat rate, room to negotiate
Real Cost Comparison
Business processing $30,000/month with 60% debit, 40% credit:
| Pricing Model | Monthly Cost | Annual Cost |
|---|---|---|
| Square (2.6% + 10¢) | $900 | $10,800 |
| Interchange Plus (IC + 0.3% + 10¢) | $630 | $7,560 |
| Annual Savings | $270/mo | $3,240/yr |
When Each Model Makes Sense
Flat Rate is Better If:
• Process less than $5,000/month
• Have very high average tickets ($500+)
• Primarily accept premium/rewards credit cards
• Value simplicity over savings
Interchange Plus Wins If:
• Process more than $10,000/month
• Accept a mix of debit and credit cards
• Have lower average tickets (under $100)
• Want to maximize profits
Ready to stop overpaying?
Upload your processing statement and PayPro will show the real effective rate, hidden fees, and processor markup in plain English.
Analyze my statement freeFrequently asked questions
Why do debit cards cost less with interchange plus?
Debit cards have regulated interchange rates of about 0.5% + $0.21. With flat rate, you pay 2.6% even on debit—overpaying by 2%+ on every debit transaction.
Is interchange plus harder to understand?
Statements are more complex, but PayPro provides clear breakdowns showing your exact costs. The savings far outweigh the slight complexity.
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