Summary: Flat-rate pricing bundles interchange, assessments, and markup into one rate (2.6% + 15c in person at Square) and wins on simplicity under about $10,000 a month. Interchange-plus passes interchange through at cost plus an open markup (often +0.30% + 10c) and usually wins above $10,000 a month. Tiered pricing, which sorts transactions into qualified/mid/non-qualified buckets, is the model to avoid: the buckets are defined by the processor and hide the true cost.
Processors sell four pricing models, and three of them are legitimate choices for different businesses. The fourth exists to confuse you. This guide explains how each model actually bills you, runs three typical businesses through the math, and names the volume where each model wins.
Flat-rate charges one percentage plus one fixed fee on every transaction regardless of card type: Square's free plan is 2.6 percent plus 15 cents in person and 3.3 percent plus 30 cents online; Stripe is 2.9 percent plus 30 cents online. There is no monthly fee, no statement to decode, and setup takes minutes. The catch is the bundle: the processor averages the interchange distribution and keeps the spread, so every cheap debit transaction subsidizes their margin on your expensive rewards cards.
Below about $10,000 in monthly volume, that subsidy costs you little in dollars, and the zero monthly fee and zero complexity are worth more than the savings. Above $10,000, the math turns: you are paying a premium on every transaction for simplicity you no longer need.
Interchange-plus splits your statement into two lines per transaction: the actual interchange cost, passed through at exactly what the networks charged, plus the processor's markup. A typical small-business deal in 2026 is interchange plus 0.30 percent plus 10 cents. You can verify every line against the published interchange schedules, which makes overcharging visible and therefore rare.
The transparency is the product as much as the price. Processors on interchange-plus compete on the markup, the only number they control, so shopping your statement annually actually works. Businesses processing over $10,000 a month, especially those with heavy debit volume (where the pass-through savings are largest), typically save 0.3 to 1.0 points versus flat-rate.
Tiered pricing sorts your transactions into qualified, mid-qualified, and non-qualified buckets, each with its own rate. The problem is that the processor defines the buckets and can move transactions between them. A transaction that qualified last month may be non-qualified this month at a rate a point higher, with no change in the underlying interchange cost. The buckets make your statement unreadable by design, and unreadable statements hide margin. If a sales rep pitches tiered pricing, ask for interchange-plus instead.
Subscription pricing charges a flat monthly fee, around $99, plus interchange at cost with zero percentage markup. Below $10,000 a month the fixed fee eats the savings and it is the most expensive option. Above $20,000 a month it is usually the cheapest, because the fixed fee spreads thinner as volume grows. Large, infrequent payments are where it shines: a consultant running fifty $1,000 invoices monthly can save roughly $500 a month versus flat-rate, because almost nothing is lost to percentage markup.
An interchange-plus statement has three sections worth reading. The interchange section lists every transaction's actual network cost by card type: this is where you verify the pass-through is honest by spot-checking against the published schedules. The markup section shows the processor's percentage and per-transaction fee: this is the number to negotiate. The fees section lists monthly, gateway, PCI, and miscellaneous charges: this is where junk fees hide.
Red flags on any statement: tiered-sounding labels like qualified and non-qualified on what was sold as interchange-plus, bundled per-transaction fees that exceed the quoted markup, and new line items that appear 12 to 18 months after signing, the classic rate-review increase. A clean interchange-plus statement is boring; boring is what you want.
Not at low volume. Under about $10,000 a month, flat-rate's zero monthly fee and simplicity usually win in dollars. Interchange-plus pulls ahead as volume grows, typically saving 0.3 to 1.0 points above $10,000 monthly.
Tiered pricing sorts transactions into qualified, mid-qualified, and non-qualified buckets at processor-defined rates. The processor controls the bucket definitions, making statements unreadable and hiding margin. Interchange-plus is transparent by comparison.
Above roughly $20,000 in monthly volume, or with large average tickets. The ~$99 monthly fee is the most expensive option at small volumes but the cheapest at scale since there is no percentage markup.
Often yes, but many processors steer new signups to flat-rate and reserve interchange-plus for merchants who ask. Ask explicitly, get the markup in writing, and watch for early termination fees ($0 to $750) on traditional contracts.
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Figures: 2026. Sources: published 2026 processor rate schedules (Square, Stripe), Visa and Mastercard 2026 interchange schedules, the Federal Reserve (Durbin Amendment debit caps), and the Merchants Payments Coalition. This page is for planning only and is not financial, tax, or legal advice. Verify with the cited source or a qualified professional.