top of page

Interchange Plus Pricing Model

More and more people are using credit cards instead of cash. This payment option is highly convenient, relatively secure, and fast. What’s not to like?

However, did you know that the credit card processing fees come out of the merchant’s pocket? That means business owners (that’s you!) have to pay a certain fee per transaction. This amount goes to the bank or credit card company.

How can you choose the best pricing model for your business? Learn about Interchange Plus Pricing and why it’s a great option for merchant accounts.

With this model, you can reduce your payment processing fees, avoid hidden charges, and increase your profit.

Before delving deeper, here’s a look at some essential information about credit card payment processing.

What Is the Credit Card Processing Fee?

Credit card companies have different formulas for computing the credit card processing fee. It usually covers the following:

  • Point-of-sale – This includes the card reader that processes the payment.

  • Payment gateway or payment processor ­– The software that connects the credit card holder’s bank to the merchant’s bank and transfers important transaction details.

  • Additional charges ­– The credit card company has other charges that differ from every company.

Different Pricing Models for Credit Cards Service Fee

Each of these pricing models has its pros and cons. As a merchant, you must know which would help boost your business profits.

Tiered Pricing

In this pricing model, fees are computed based on a set of criteria linked to the risk of the transaction. The more requirements are met, the lower the processing fee. In some tiered pricing models, the most popular cards get charged more than the rest.

It’s not as straightforward as it sounds. The final amount is at the discretion of the credit card company. As a result, it’s difficult to estimate how much a merchant should pay at the end of the month.

Flat Rate

Here, all the credit cards are charged the same fee. However, “simple” does not always translate to “best.”

Credit card companies usually charge a high flat rate, so this pricing model is more expensive for the merchant.

Subscription Based

In the subscription model, merchants pay a fixed fee each month no matter how many transactions were made.

Big businesses often prefer this model since they have a high number of transactions. Keep in mind that it might not work out for startups that have a fluctuating income.

Interchange Plus Pricing

Interchange Plus Pricing has two aspects:

  • A fixed base fee called “interchange” - This amount is charged by the credit card company (Visa, Mastercard).

  • An additional charge or “plus” - This is the margin that credit card facilitators (Loyent) take.

For example, a credit card company may charge 1.25% + 20 cents per transaction. This means that the fees are proportional to the balance transferred. Take note that banks and credit card companies change this formula regularly.

Sounds complicated? Don’t worry. Thanks to this model, you can save a lot of money at the end of each month.

The best part? What you see is what you get. Both the merchant and credit card processing company are aware of the exact cost involved per transaction. You won’t get blindsided at the end of each month.

Why Should You Consider Interchange Plus Pricing?

Here are the pros and cons of choosing this pricing model:


  • Unlike other pricing methods, this model is transparent. It’s easier for merchants to see how much they need to pay at the end of every month. There are no hidden fees or surprise charges.

  • It offers more income for merchants. Even with the base amount and transaction fee, the total cost is far less than what you’d pay in the fixed, subscription, or tiered pricing models.

  • You can calculate your monthly credit card transaction fee on your own.


  • Some credit card processing companies have not yet switched to this model.

  • Compared to flat rates and fixed fees, this model requires a more complicated formula per transaction.

As Interchange Plus Pricing is the cheapest pricing model, merchants should make it a priority. Make sure you do your research well and compare your options for credit card processing.

At Loyent, we go against hidden fees and contracts. To learn more about how we can help you grow your small business, connect with one of our payment advisors. We’re always happy to answer any questions you may have.


bottom of page