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What is Flat Rate Pricing?

Paying with debit or credit cards is much more convenient than using cash - currently, card payments account for up to 65% or more of sales. However, these payments come with the additional burden of processing charges.

Based on the transaction volume, these charges could increase your overhead considerably and make it harder to give your clients the best costs.

Still, numerous business owners find it hard to comprehend the intricacies of credit card processing rates and fees. This guide examines what this model is about and the associated benefits.

What Flat Rate Pricing Is All About?

The most challenging aspect of accepting credit cards as a means of payment is determining your cost. A flat-rate model is an interesting option since it helps establish the costs your business will incur beforehand.

Currently, the percentage system is the most common kind of flat-rate processing. The model seeks to eradicate some of the misunderstandings surrounding interchange charges and issues predictable rates that you'll pay consistently.

This model is meant to be simple and can be provided without a transaction charge; this can be advantageous for businesses with numerous transactions.

From a budgeting viewpoint, a flat, constant rate appeals to business owners. However, this model isn't necessarily the most cost-effective.

Fees for Flat-Rate Pricing

The average charges for swiped transactions range between 2.75% and 3.5%. A transaction-based fee might also exist for all transactions. Processors typically regard this system as the most competitive without needless surprises.

It's known that this processing makes your expenses predictable. However, credit card processing doesn't function this way. The card processor can't remain competitive or remain in business if it gives you the best rate.

The major drawbacks of flat-rate pricing are the high processing rates. You'll discover they're frequently higher than what it could cost under any other processing plan.

When Is Flat-Rate Pricing Beneficial?

The model functions best for newly established or small businesses that lack high processing volume and don't want to be burdened by extra account charges.

If you're a start-up or your business is a side gig, which you don't expect to grow considerably over time, this model facilitates the acceptance of debit and credit cards without the expense and dedication of a full-service merchant account.

Although you'll pay more per transaction for processing credit cards, you won't need to pay all the extra charges that come with a true merchant account. Furthermore, you won't need a long-term contract.

This pricing model can save you money by eradicating most of the extra charges. The lack of a long-term agreement makes it easy to switch to a full-service merchant account at the appropriate time.

Now that we understand how flat-rate pricing works, let’s look at the two key benefits they provide to businesses:


The initial advantage of this model is the ability to predict the processing charges monthly. Predictable rates will allow you to plan your costs better as well as price services and goods effectively to offer a more consistent margin. Once you identify the processing rate, the need to fluctuate item pricing won't be there.


This plan comes with flexibility, so you don't have to find yourself locked into long-term commitments that obstruct your flexibility and make it hard to plan. This plan is ideal for small businesses seeking short-term processing or looking to decrease the long-term business overhead.

Flexibility is equally beneficial to any business that might be deemed high-risk or generally needs agility because of possible changes in the business revenue, model, and other facets influencing the business.

Suitable Merchants for Flat-Rate Processing

If you're considering this model, you might want to establish whether you're a suitable candidate. The plan is suitable for:


This plan is ideal for these businesses since they require a shorter contract and less overhead. Startups are frequently unstable and young, so having a flexible processor is ideal. Numerous credit card processing companies have solutions geared specifically towards startups.

High-Risk Businesses

High-risk businesses use this plan since they perform riskier transactions that could attract increased charges. If they can secure an account with a flat-rate processor, these businesses usually take that chance because it's favorable.


Although a flat rate isn't always costly, it frequently sits at the high end. Merchant service providers set them this way to offer room for percentages that might creep through interchange rates.

That's why merchants typically incur more than what's needed. If you're wondering how this model functions, we hope that this guide has helped you make a more informed decision for your business.

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.


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