Interchange-plus vs. flat-rate vs. tiered
Processors package the same underlying costs in three very different ways. The one you're on says a lot about how much markup you can actually see - and how much you're paying without realizing it.
Interchange-plus passes network costs through at cost and states the markup separately, which makes it the most transparent and usually the cheapest past the startup phase. Flat-rate charges one blended rate for every card - simple, and fine at low volume. Tiered sorts transactions into buckets the processor defines, hides the real markup, and is rarely the best deal for the merchant.
As we covered in how processing fees work, every transaction carries the same fixed interchange and assessment costs. The difference between a fair deal and an expensive one comes down to how a processor wraps its markup around those costs. There are three common structures.
Interchange-plus - the transparent one
Interchange-plus (sometimes called "cost-plus") passes the networks' interchange and assessments straight through, then adds a clearly stated markup - for example, interchange + 0.30% + 10¢ per transaction. Because the markup is broken out as its own number, you can see exactly what the processor earns and compare offers apples-to-apples.
- Best for: most established businesses, and anyone who wants to actually verify their costs.
- Watch for: nothing hidden by design - just confirm the markup is competitive.
Flat-rate - the simple one
Flat-rate pricing charges one blended rate for everything, like 2.9% + 30¢, regardless of the underlying card. It's predictable and easy to understand, which is why it's the default for many all-in-one providers.
The trade-off is that you pay the same rate on a cheap debit card as on an expensive rewards card. At low volume the simplicity is worth it; as your sales grow, that blended rate usually leaves money on the table compared with interchange-plus.
- Best for: newer or very low-volume businesses that value predictability.
- Watch for: the cost of "simple" rising quietly as your volume grows.
Tiered - the opaque one
Tiered pricing sorts every transaction into buckets - typically qualified, mid-qualified, and non-qualified - each with its own rate. The catch: the processor decides which transactions land in which tier, and the definitions are rarely in your favor. Rewards cards and keyed-in transactions get "downgraded" into pricier tiers, and because the real interchange is hidden, it's nearly impossible to know your true markup.
- Best for: honestly, the processor.
- Watch for: statements grouped into qualified / non-qualified tiers - usually a sign to shop around.
Rule of thumb: if you can't point to a single, clearly labeled markup number, you're probably paying more than you think.
Side by side
| Model | Transparency | Best fit |
|---|---|---|
| Interchange-plus | High - markup is stated separately | Most growing & established businesses |
| Flat-rate | Medium - simple but blended | Low volume, predictability-first |
| Tiered | Low - markup is hidden in the tiers | Rarely the best choice for the merchant |
Which should you choose?
For most businesses past the startup phase, interchange-plus wins on transparency and usually on total cost. Flat-rate is a fine starting point at low volume. Tiered is the one to be most skeptical of. The surest way to know is to check your merchant statement and calculate your effective rate - our calculator does it in seconds - then see whether a different structure would beat it.
For real numbers to compare against, average processing fees in 2026 puts the published rates of Square, Stripe, Shopify, Clover, PayPal and Helcim side by side, and shows which providers publish no rates at all.
One reason the structure matters more than usual right now: the pending Visa and Mastercard settlement would lower interchange itself. On interchange-plus that reduction reaches you automatically. On flat-rate or tiered, it does not.
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