Interchange-plus vs flat-rate credit card processing

What flat-rate pricing means

In a flat-rate arrangement, many purchases are charged using a published percentage plus, sometimes, a fixed per-transaction amount. This makes cost forecasting simpler, but the actual percentage of your sales paid in fees can still change because of keyed transactions, refunds, monthly software fees or other charges.

What interchange-plus pricing means

Interchange-plus arrangements generally separate underlying card-related costs from the processor's own markup. The markup may include a percentage and/or per-transaction component. The underlying costs vary with the kinds of cards your customers use and how payments are accepted.

Which is cheaper?

Neither model is automatically cheaper. Total cost depends on volume, transaction count, average ticket, card mix, in-person versus online payments, fraud or dispute costs, software and equipment. A transparent quote should show exactly which charges apply to your business.

Questions before switching

• Are interchange and card-network assessments included in the quoted price?
• What happens to cost when customers use rewards, corporate or manually entered cards?
• Are monthly, PCI-related or gateway fees charged separately?
• Does the provider require a particular terminal, POS subscription or contract term?
• How are chargebacks and refunds priced?