What is interchange-plus? And why it matters
There are several ways processors can charge merchants for processing, and interchange-plus is one of them. With this approach, you pay the actual card network fee, set by Visa and Mastercard, plus a separate, negotiable markup from your processor. The catch: most merchants don't know which method they're being charged under, how it compares to the alternatives, or whether their markup is competitive. Pair was built to close that gap. We review your statement and tell you exactly where you stand, for free.
Everything you need to know about Interchange-plus
Interchange-plus (often written as IC+ or Interchange+) is a pricing model where you pay the exact cost set by Visa and Mastercard for each transaction, plus a small markup from your processor. Unlike tiered or flat-rate pricing, every fee is transparent and visible on your statement.
The appeal is simple: only the processor's markup is negotiable. The interchange cost is set by the card networks and is the same regardless of which processor you choose. That's what makes interchange-plus fair. Your processor can't mark up the part they don't control.
+ Processor markup (negotiable)
+ Per-transaction fee (typically $0.08–$0.15)
= Your total cost
This is fundamentally different from how most merchants are charged. Most are on tiered or flat-rate plans where the processor keeps all the details hidden, charging one bundle price for everything.
Find out if you are paying too much →
Your statement should show you exactly what you're being charged. If it doesn't break down interchange separately from the processor markup, you're likely not on an IC+ plan or you're working with a processor that isn't transparent.
Request a free fee reviewUnderstanding the interchange-plus formula
The math is straightforward, but it helps to break it down with a real transaction to see how the pieces fit together.
The three parts of your cost
- Interchange: This is the cost set by Visa or Mastercard. It varies based on the type of card (credit vs. debit), the industry you're in, and the card's rewards tier. The average is around 1.3% to 2.5%, depending on card mix.
- Processor markup: This is what your processor charges on top of interchange. This is the part you can negotiate. Competitive markups range from 0.2% to 0.5%.
- Per-transaction fee: A fixed fee per transaction, typically $0.08 to $0.15. This covers the cost of processing the individual transaction.
Because interchange changes frequently (usually annually in April), your effective rate will vary slightly month-to-month based on the cards you accept that month. This is one trade-off of transparency.
How interchange-plus compares to other models
There are three common pricing structures for merchant processing. Only one shows you the full picture.
Tiered pricing
Transactions are sorted into "qualified," "mid-qualified," and "non-qualified" tiers. Most end up in the expensive ones. You can't see what you're actually paying, rates change without notice, and it's nearly impossible to negotiate.
Flat-rate pricing
One simple rate for everything (e.g., 2.6% + $0.10). Predictable and easy to understand, but usually more expensive than IC+ because you're paying a premium for simplicity.
Interchange-plus
You pay actual interchange plus a small markup. Full transparency into every fee, the markup is negotiable, and it typically saves 0.3–0.8% compared to flat-rate for established merchants.
Tiered pricing
❌ Avoid Least transparent, rates hidden, rates change without warningFlat-rate pricing
👍 OK Simple and predictable, but usually costs 0.3–0.8% more than IC+Interchange-plus
⭐ PAIR Recommended Full transparency, lowest cost for most merchants above $10K/monthA real-world example on one transaction
Here's what a $1,000 Visa credit card transaction looks like when charged under different pricing models.
| Component | IC+ Rate | IC+ Cost |
|---|---|---|
| Interchange (Visa 1.29%) | 1.29% | $12.90 |
| Processor markup | 0.30% | $3.00 |
| Per-transaction fee | $0.10 | $0.10 |
| Total cost | 1.59% | $16.00 |
Now compare that to the same transaction on a flat-rate processor at 2.7%: you'd pay $27.00. That's $11 more on a single transaction. Across your monthly volume, this difference compounds quickly.
Want to see your actual numbers?
A generic example helps, but your real savings depend on card volume, card mix, average ticket size, and industry. A statement review gives you a clear, personalized answer.
Start with a free auditWhat makes a good interchange-plus rate?
Since you can't negotiate interchange (it's set by the card networks), focus your energy on the processor markup. Here's what to target:
| Markup Range | Assessment |
|---|---|
| Under 0.3% | Excellent. You have a strong rate, especially if you're an established merchant with consistent volume. |
| 0.3% – 0.5% | Competitive. Most well-priced merchants land in this range. This is what PAIR targets for clients. |
| 0.5% – 0.8% | Worth negotiating down, especially if you've been with the processor for over a year or have meaningful volume. |
| Over 0.8% | You're overpaying. This is a signal to renegotiate with your current processor or shop around. |
The per-transaction fee is usually less negotiable, but competitive ranges are $0.08 to $0.15. If you're paying more than that, ask your processor why.
The math: why interchange-plus saves money
Let's use a realistic example to see why IC+ can save significant money compared to flat-rate pricing.
Flat-rate at 2.7%
$810 Monthly cost on $30K card volumeIC+ (1.55% avg + 0.3%)
$556 Monthly cost on same $30K volumeThe difference is $254 per month, or about $3,000 per year. For many merchants, that's enough to fund new equipment, hire help, or protect profit margins during lean months.
Scale that up: a business doing $500K annually in card sales (about $42K/month) could save $5,000 to $8,000 per year by switching from flat-rate to IC+. Multiply that across years and the number becomes meaningful.
Your actual savings depend on your card mix
Interchange varies by card type. A month with more rewards credit cards costs slightly more than a month with more debit. This variance is tiny (usually under $50/month) but worth understanding.
See what you should be payingInterchange-plus vs. flat-rate: the detailed comparison
Both have their place. But for established merchants with meaningful volume, IC+ almost always wins on cost.
| Factor | Interchange-Plus | Flat-Rate |
|---|---|---|
| What you see | Every fee broken out separately | One single rate for everything |
| What's negotiable | Only the processor markup | Nothing — it's fixed |
| Cost at $500K/year | ~$12,000 (2.4%) | ~$13,500 (2.7%) |
| Best for | Established businesses with $10K+ monthly volume | Startups or very low-volume businesses |
| Control over costs | High — you can negotiate the markup | None — rate is locked in |
| Month-to-month variance | Small changes based on card mix | Exactly the same every month |
When flat-rate might still make sense
- You're just starting out and card volume is under $5K per month.
- You need predictable, fixed costs and can't handle small month-to-month variance.
- You don't want to deal with statement complexity.
- Simplicity is more important than saving $200–$300 per month.
When interchange-plus is clearly better
- You process $10K+ per month in card volume.
- You've been in business for at least a year and have consistent volume.
- You want transparency into what you're being charged.
- You want the ability to negotiate and shop around for better rates.
- You're willing to spend 30 minutes understanding your statement.
Common questions merchants ask
Is interchange-plus always cheaper than flat-rate?
For most established merchants doing over $10K/month in card volume, yes. The math works out because the processor markup on IC+ is almost always lower than the all-in flat rate. Below $10K/month, the simplicity of flat-rate sometimes wins because the dollar difference is small and you avoid statement complexity.
Can I get interchange-plus from any processor?
Most traditional processors offer it, but you usually have to ask. Stripe and Square don't offer it at all (they're flat-rate only). Some processors will quote you flat-rate by default and only move you to IC+ if you specifically request it. If your processor refuses to move you to IC+, that's a signal to shop around.
What's a typical markup on interchange-plus?
0.2% to 0.5% is the competitive range. Under 0.3% is excellent. Anything above 0.5% is worth negotiating, especially if you have meaningful volume and have been with the processor for more than a year. Don't accept a quote above 0.8% without shopping around first.
Does interchange change often?
Yes, interchange rates are set by Visa and Mastercard and typically change once per year, usually in April. This means your monthly effective rate will vary slightly based on which cards you accept that month. The variance is usually small (under 0.1%), but it's why IC+ statements look slightly different month-to-month compared to flat-rate.
What's the difference between IC+ and IC++?
Standard interchange-plus = interchange + processor markup. "Interchange-plus-plus" (IC++) adds a third layer for card brand assessment fees. It's slightly more transparent but rarely changes the bottom line meaningfully. For most merchants, standard IC+ is sufficient.
What's the catch with interchange-plus?
Honestly, very little for established merchants. The main trade-off is that your statement is more detailed and your monthly fees vary slightly based on card mix. If you have tight cash flow and need perfectly predictable costs, flat-rate's consistency might appeal to you even though it costs more on average.
How do I ask my current processor about switching to IC+?
Call your account rep and say: "I want to move to interchange-plus pricing. What's your processor markup?" If they hedge or refuse, ask for a quote in writing. If they quote you above 0.5%, you have leverage to shop around. Most processors will move you rather than lose the account.
Find out what you should actually be paying
PAIR reviews your processing statement, benchmarks your effective rate against merchants at your volume, and explains whether interchange-plus, rate negotiation, or another option makes the most sense for your business.
- Free statement analysis
- Line-by-line fee breakdown
- Industry benchmark comparison
- Plain-English savings report