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The short answer
Every card sale carries a cost set by the card networks and the bank that issued the card. Pricing models differ in how much of that cost you can see. Interchange-plus shows it line by line and adds the processor's markup on top. Flat rate folds everything into one price. Tiered sorts each sale into a bucket, often called qualified, mid-qualified and non-qualified, and charges a price per bucket.
No model is always cheapest. Flat rate wins on simplicity. Interchange-plus wins on transparency, because the markup is a number you can compare across offers. Tiered is the hardest to compare, because the processor decides which cards fall in which bucket.
What interchange is
Definition: interchange
The fee the card-issuing bank receives on each card sale. Visa describes interchange reimbursement fees as "transfer fees between acquiring banks and issuing banks for each Visa card transaction."
You do not pay interchange to Visa or the issuing bank yourself. Visa says merchants instead "negotiate and pay a 'merchant discount' to their financial institution," usually a percent per transaction. Your processor pays interchange out of that.
Interchange varies by card type and how the card is taken. Visa publishes its U.S. table on its rates and fees page. Debit is the one area set by law: under the Federal Reserve's Regulation II, a debit issuer with $10 billion or more in assets may receive no more than 21 cents plus 5 basis points (0.05%) of the sale, plus 1 cent if it meets fraud-prevention standards. Smaller issuers are exempt from the cap.
The three pricing models
| Model | What you pay | What you can see | Easy to compare? |
|---|---|---|---|
| Interchange-plus | Interchange and card-brand fees at cost, plus a stated markup (percent and per-sale) | Each cost line | Yes: compare the markups |
| Flat rate | One percent plus a per-sale amount for every card | One number | Yes, for the price; not for the cost underneath |
| Tiered | A price per bucket; the processor decides each card's bucket | Bucket totals | Hard: bucket rules differ |
Some processors offer more than one. Stripe, for example, lists a pay-as-you-go price of 2.9% plus 30 cents per successful transaction for domestic cards, and also lists "IC+ pricing" for businesses with large payment volume.
A worked example on a regulated debit sale
Take a $50 sale on a debit card from a bank with $10 billion or more in assets.
Worked example
Most interchange the issuer can receive: 21 cents + (0.05% x $50 = 2.5 cents) + 1 cent = 34.5 cents, or 0.69% of the sale.
Flat rate at 2.9% + 30 cents: $1.45 + $0.30 = $1.75, or 3.5% of the sale.
On interchange-plus, you would pay that interchange, the card-brand fees on your statement, and the processor's stated markup. If the markup were, say, 0.30% plus 10 cents (a hypothetical), it would add 25 cents.
The gap is widest on low-cost cards like regulated debit and smallest on cards with high interchange. That is why your card mix, not one sample sale, decides which model is cheaper. The processing fee analyzer runs your own volume and fees.
How to choose
Use your last three statements and answer three questions:
- What is your effective rate? Total fees divided by total card volume. Our statement guide shows how to find both numbers.
- How much of your volume is debit? The more regulated debit you take, the more a flat rate overcharges compared with pass-through pricing.
- What is the markup on each offer? On interchange-plus quotes, compare only the markup, since interchange is the same pass-through cost for every processor.
A flat rate can still be the right call for a new or small business that values one predictable number and has little volume to negotiate with.
Fees outside the rate
The pricing model is only one part of the contract. Before you sign, get these in writing:
- the contract length and any early termination fee;
- monthly minimums, statement fees and PCI compliance or non-compliance fees;
- equipment: bought, rented or leased, and whether a lease can be canceled;
- how and when the processor can change your prices.
Watch out
Passing card costs to customers is a separate question with its own rules. Visa allows surcharges on credit cards only, never debit or prepaid, and several states restrict them. See our surcharge law table before you add one.
Bottom line
Bottom line
Ask every processor for an interchange-plus quote even if you want flat rate, because the markup tells you what the processor is really charging. Then compare effective rates on your own statements, not on a sample sale, and read the termination clause before the price.
Which one are you paying?
Enter last month's statement numbers and compare your rate with an interchange-plus estimate.
Frequently asked questions
Written by the Business Funders editorial team. Every fact on this page links to the source we checked, listed below. Found an error? Tell us.
Sources
- Visa, Rates, fees and rules: interchange reimbursement fees, accessed Oct 20, 2026
- 12 CFR 235.3, Regulation II, reasonable and proportional interchange fees (eCFR), accessed Oct 20, 2026
- 12 CFR 235.4, fraud-prevention adjustment (eCFR), accessed Oct 20, 2026
- 12 CFR 235.5, exemptions, issuers under $10 billion (eCFR), accessed Oct 20, 2026
- Stripe, Pricing (2.9% + 30 cents for domestic cards; IC+ pricing offered), accessed Oct 20, 2026
- Visa, Surcharging credit cards: Q&A for merchants, accessed Oct 20, 2026