Interchange-plus pricing is a credit card processing model where you pay the actual interchange fee set by the card network, plus a fixed markup from your processor that is listed separately. Because the two parts are shown line by line, you can see exactly what the card networks charge and what your provider keeps. This guide explains how interchange-plus works, how it compares to flat-rate and tiered pricing, how to read the statement, and how to tell whether a quote is fair.
Key takeaways
- Interchange-plus = interchange (pass-through) + network fees (pass-through) + your processor’s markup.
- Interchange is set by the card networks and paid to the card-issuing bank. Your processor cannot lower it, but it cannot hide a markup inside it either.
- The markup is the only part you negotiate. It is usually quoted as a percentage plus a per-transaction fee.
- It tends to beat flat-rate pricing once you process steady monthly volume, and it is almost always clearer than tiered pricing.
- Compare quotes by effective rate (total fees ÷ total sales), not by the headline number.
What is interchange-plus pricing?
Every time a customer pays with a card, several parties take a small cut: the bank that issued the card, the card network, and the company that processes the payment for you. Interchange-plus pricing (also called “cost-plus” or “pass-through” pricing) simply passes the first two costs to you at their true amount and adds a disclosed markup on top.
The formula looks like this:
Total cost per sale = interchange fee + card network fees + processor markup (% + per-transaction fee)
You will often see a quote written as something like “interchange + 0.30% + $0.10.” The “interchange” part changes from card to card. The “+ 0.30% + $0.10” part is the processor’s margin and stays fixed under your agreement. (That example is for illustration only, not a real quote.)
Interchange-plus applies to card payments that run through a dedicated merchant account. If you are still learning how merchant accounts, acquirers, and processors fit together, our guide What Is a Merchant Account? covers the basics.
The three parts of every interchange-plus charge
1. Interchange fees (paid to the card-issuing bank)
Interchange is the largest part of the cost. Visa describes interchange reimbursement fees as transfer fees between acquiring banks and issuing banks on each transaction, and notes that merchants pay a “merchant discount” to their own financial institution rather than paying interchange directly (Visa: Credit Card Processing Fees & Interchange Rates). Visa and Mastercard both publish their U.S. interchange rate schedules.
Rates are not the same for every card. Mastercard lists factors such as merchant category, the time between authorization and clearing, whether enhanced transaction data is submitted, and the merchant’s Mastercard sales volume. It also notes that its interchange rates are typically updated twice a year (Mastercard: Interchange Fees and Rates Explained). In practice, a rewards credit card used online usually costs more than a basic debit card.
2. Card network fees (assessments)
Card brands also charge their own fees, often called assessments or network fees. These are usually small and are charged on volume, on transactions, or on specific events. On a true interchange-plus statement, they are passed through at cost and listed separately, not blended into the markup.
3. The processor markup (the part you negotiate)
The markup covers your processor’s service, risk, support, and profit. It is normally a percentage of each sale plus a flat per-transaction fee. Some providers also charge monthly items like a gateway fee, statement fee, or PCI compliance program fee. Ask for all of these in writing, because a low markup with heavy monthly fees can cost more overall.
Get matched with processing partners through one simple application. Interchange-plus pricing from 0.40% + $0.10.
Interchange-plus pricing vs. flat-rate vs. tiered pricing
Most U.S. processors use one of three models. The table below shows how they differ in the ways that matter to an online business.
| Factor | Interchange-plus | Flat-rate | Tiered |
|---|---|---|---|
| How you’re charged | True interchange + network fees + fixed markup | One blended rate for most cards | Transactions sorted into “qualified,” “mid-qualified,” and “non-qualified” buckets |
| Transparency | High: every cost is itemized | Medium: simple, but hides the real cost | Low: the processor decides which bucket applies |
| Cost on low-cost cards (e.g., debit) | You get the savings | You pay the same blended rate | Savings depend on bucket rules |
| Predictability per sale | Varies by card type | Very predictable | Varies, often unpredictably |
| Best fit | Businesses with steady monthly volume that want clear costs | Very new or very low-volume sellers | Rarely the best choice |
| Statement complexity | Longer, but readable once you know the parts | Short | Short, but hard to audit |
Flat-rate pricing is easy to understand, but you pay the same rate whether a customer uses a low-cost debit card or a premium rewards card. Tiered pricing looks simple on paper, yet the processor controls which transactions land in the expensive “non-qualified” tier. Interchange-plus removes that guesswork, which is why many growing online brands switch to it.
How interchange-plus pricing works: a worked example
Here is a simple example using hypothetical numbers so you can see the math. These are not actual card network rates or Payment Circle rates.
Say an e-commerce store makes a $100 online sale. Assume the interchange for that card is 1.80% + $0.10, network fees add $0.14, and the processor’s markup is 0.30% + $0.10.
- Interchange: 1.80% of $100 = $1.80, plus $0.10 = $1.90
- Network fees: $0.14
- Processor markup: 0.30% of $100 = $0.30, plus $0.10 = $0.40
- Total fees: $1.90 + $0.14 + $0.40 = $2.44, or an effective rate of 2.44% on this sale
Now suppose the next customer pays with a regulated debit card. Under the Federal Reserve’s Regulation II, debit cards from large issuers (those with $10 billion or more in assets) have capped interchange. The Fed lists that cap as $0.21 plus 0.05% of the transaction, plus a $0.01 fraud-prevention adjustment if the issuer qualifies (Federal Reserve: Average Debit Card Interchange Fee by Payment Card Network). On a $100 sale, that interchange is about $0.27. With the same markup, this sale costs far less than the rewards-card sale, and under interchange-plus, you keep that difference. Under a flat rate, you would not.
One note: the Fed proposed lowering the debit cap in 2023, and the rule has been challenged in federal court. Check the Federal Reserve’s Regulation II overview for the current status before you rely on a specific figure.
What drives your interchange costs up or down
You can’t negotiate interchange, but you can influence which interchange category your transactions land in. The biggest factors are:
- Card type: Debit, standard credit, rewards credit, and business or corporate cards all carry different rates.
- How the card is accepted: Online and keyed-in (card-not-present) sales generally cost more than chip or tap payments, because fraud risk is higher.
- Merchant category: Networks set rates by the type of business you run. Our guide to merchant category codes (MCCs) explains how that code is assigned.
- Settlement timing: Mastercard lists the time between authorization and clearing as a rate factor. Batching late can push sales into a pricier category (often called a “downgrade”).
- Data you send: Passing address verification data and, for B2B sales, enhanced (Level 2 or Level 3) data can qualify some transactions for lower rates.
A well-configured payment gateway helps here. Gateways such as NMI and Authorize.net can pass address verification and other transaction data, and settle batches automatically each day. If you sell to other businesses by phone or invoice, a virtual terminal lets you enter that extra data for each sale.
How to read an interchange-plus statement
Interchange-plus statements are longer than flat-rate ones, but they follow a clear pattern. Look for these sections:
- Summary: Total sales, refunds, number of transactions, and total fees for the month.
- Interchange detail: Each interchange category you used, with its rate, number of transactions, and dollar amount. Watch for many sales in “standard” or “non-qualified” categories, which can point to downgrades.
- Network or card brand fees: Assessments and per-item brand fees, passed through at cost.
- Processor fees: Your markup percentage, per-transaction fee, and any monthly, gateway, or program fees. This is where to confirm you’re billed what your agreement says.
- Event fees: Chargeback, retrieval, and ACH reject fees, if any.
To find your effective rate, divide total fees by total card sales for the month. That single number is the fairest way to compare your current setup against a new quote. For typical ranges and Visa’s published interchange rates by card type, see our guide to credit card processing fees. If chargeback fees show up often, our guide on how to reduce payment processing chargebacks can help you bring them down.
Is interchange-plus pricing right for your business?
Interchange-plus pricing is usually the better fit when you:
- Process steady monthly card volume, not just a handful of sales.
- See a healthy mix of debit cards, where pass-through pricing saves the most.
- Run recurring billing, such as subscription and continuity programs or SaaS platforms, where small per-sale savings add up every month.
- Want to audit your costs and hold your provider to a clear contract.
A flat rate may be simpler if you’re just testing an idea and process very little. For businesses in higher-risk categories, markups are typically higher because the processor takes on more risk; see what makes a business high-risk for card processing to understand why. The structure is still interchange-plus; only the markup changes.
At Payment Circle, pricing follows this model. Accounts are placed into interchange-plus tiers (Standard Online, Growth Online, Specialized Online, and Enhanced-Risk, which is custom) based on risk level and processing volume. You can see how the tiers work on our pricing page.
Checklist: how to evaluate an interchange-plus quote
Use this checklist before you sign any interchange-plus pricing agreement:
- ☐ The quote says “interchange-plus” (or “cost-plus”) in writing, not “tiered” or “qualified rate.”
- ☐ The markup percentage and per-transaction fee are both stated clearly.
- ☐ Card network fees are passed through at cost, with no extra markup added.
- ☐ Every monthly fee is listed: gateway, statement, PCI program, account minimums.
- ☐ Chargeback, retrieval, and refund fees are disclosed.
- ☐ Contract length, early termination terms, and any reserve requirements are spelled out.
- ☐ You’ve run your last 2–3 months of statements through the new quote to compare effective rates.
- ☐ You know what happens to your markup if your volume or risk profile changes.
On PCI: the PCI Data Security Standard applies to every business that stores, processes, or transmits card data (PCI Security Standards Council: PCI DSS). A PCI program fee from your processor is a separate charge from interchange, so ask what it covers.
Common mistakes when comparing processing rates
- Comparing only the markup. A lower markup with high monthly fees can cost more. Always compare effective rates.
- Mistaking “interchange-plus” for a low rate. It’s a pricing structure, not a promise of a specific price. The markup still matters.
- Ignoring downgrades. Late batches and missing address data can raise interchange no matter how good your markup is.
- Forgetting other payment methods. For large invoices or recurring bills, ACH payment processing can cost less than cards, since it doesn’t use card interchange at all.
Related guides and next steps
- Want to see our pricing tiers? Visit Payment Circle pricing.
- Getting ready to apply? Gather your documents with the merchant account approval checklist.
- Not sure if you’re high-risk? Learn about high-risk merchant accounts.
- Choosing how to accept payments online? Read merchant account vs. payment gateway.
- Weighing cards against bank payments? Compare ACH vs. credit card processing.
- Want the full picture of a card payment? Read how payment processing works.
- Need to cut dispute costs? Explore chargeback management.
Frequently asked questions
Is interchange-plus pricing cheaper than flat-rate?
Often, but not always. For businesses with steady volume and a good share of debit cards, interchange-plus usually costs less because you pay the true cost of each card. For very small sellers, a flat rate may be close enough and simpler. Compare effective rates on your own statements to know for sure.
Who sets interchange rates?
The card networks, such as Visa and Mastercard, set interchange rates and publish them. The fee is paid to the bank that issued the customer’s card. Your processor cannot change interchange; it only controls its own markup.
How often do interchange rates change?
Mastercard says its U.S. interchange rates are typically updated twice a year. Under interchange-plus, those changes pass through to you automatically, so your markup stays the same even when interchange moves.
What is a good markup on interchange-plus?
There is no single “good” number. Markups depend on your industry, risk level, average ticket size, and monthly volume. The best test is your total effective rate and the clarity of the contract, not the markup alone.
Can high-risk businesses get interchange-plus pricing?
Yes, many high-risk accounts are priced on an interchange-plus basis. The markup is usually higher, and there may be a reserve, because the processor takes on more chargeback and fraud risk. Approval always depends on underwriting.
What is the difference between interchange-plus and cost-plus pricing?
They are generally the same thing. Interchange-plus pricing, “cost-plus,” and “pass-through” all describe passing interchange and network fees through at cost and adding a set markup. Always read the contract to confirm network fees are passed through without extra markup.
Sources and further reading
- Visa: Credit Card Processing Fees & Interchange Rates
- Mastercard: Interchange Fees and Rates Explained
- Federal Reserve: Regulation II – Average Debit Card Interchange Fee by Payment Card Network
- Federal Reserve: Regulation II (Debit Card Interchange Fees and Routing)
- PCI Security Standards Council: PCI Data Security Standard (PCI DSS)
Want clear, interchange-plus pricing for your online business? Payment Circle helps new U.S. merchants, software houses, and agencies get merchant accounts with simple contract terms. Start your application, contact our team, or call (571) 274-7950, 9:00 AM–6:00 PM Eastern.
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