If your business processes card payments, your payment pricing model might be more important than you realize. In 2024, US businesses paid a record $187.2 billion in card processing fees. Fee structures can directly shape your margins, your visibility into costs, and how easily your finance team can project growth.

Interchange plus pricing is an underused model that comes with many benefits. It gives you a window into the economics of each transaction so you can see which elements are fixed, which are negotiable, and which might need your attention.

Below, we’ll explain how interchange plus pricing works, how it differs from blended pricing models, and the pros and cons for businesses.

What’s in this article?

• What is interchange plus pricing?
  
• How does interchange plus pricing differ from blended pricing models?
  
• Why do some processors choose interchange plus pricing?
  
• What are the benefits and drawbacks of interchange plus pricing for businesses?
  
• What level of visibility comes with interchange plus pricing?
  
• How Stripe Payments can help
  

What is interchange plus pricing?

Interchange plus pricing is a pricing model for card payments. Under this model, every card transaction fee is made up of three subfees. One fee is for the bank, one is for the card network, and one is for the payment processor.

Here’s how it breaks down:

• Interchange fee: This part of the fee goes to the cardholder’s issuing bank. The amount varies based on the card type (credit vs. debit), how the payment was made (online vs. in person), and the industry. Rate formulas are published by the card networks.

• Assessment fee: This fee is paid to the card network itself (e.g., Visa, Mastercard). It’s tied to the transaction volume and covers the network’s operating costs.

• Processor markup (the “plus”): This fee is paid to the business’s payment processor. It’s usually a percentage, a per-transaction fee, or a combination of the two. The exact formula is fixed in a contract between the processor and the business.

How does interchange plus pricing differ from blended pricing models?

Unlike interchange plus pricing, blended pricing gives you a single, all-inclusive rate no matter what kind of card your customer uses. Rates such as “2.9% + 30¢” are a common example of blended pricing. The rate is set by your payment provider.

Blended pricing is useful if you need simple forecasts and don’t want to track fee categories, and it’s widely used by smaller businesses. But because it’s an all-inclusive rate, the amount you pay in fees doesn’t necessarily match the cost of what you’re buying. Also, you can’t break the fee down and see what amount is going where. And you might overpay on lower-cost transactions because the rate will be set high enough to cover the expensive ones.

Larger and fast-growing businesses often choose interchange plus pricing because it passes through the true cost of each transaction. At high volumes, its net cost is often lower than that of blended pricing. It also gives finance teams true oversight because it shows where all the money goes. That makes it easier to forecast costs, spot inefficiencies, and negotiate or shop around for the processor markup.

Why do some processors choose interchange plus pricing?

Interchange plus pricing lets payment providers build trust with customers while maintaining flexibility. It also helps them manage volatility and stay competitive.

Here’s why processors choose interchange plus pricing:

• It builds credibility: Fee transparency builds a business’s confidence in its processor. The company knows exactly what it’s paying and doesn’t need to wonder what’s hidden in a blended rate.

• It’s adaptable: Since only the markup is under their control, platforms can adjust pricing or offer volume-based discounts without constantly recalculating blended rates.

• It softens volatility: With blended pricing, processors have to absorb swings in interchange fees. With interchange plus pricing, those swings pass through to the business, which makes pricing easier to maintain across different industries and markets.

• It’s in demand: Enterprise and high-volume businesses almost always ask for interchange plus pricing because it lets them verify costs and refine margins. Platforms that offer this model can stay competitive in that tier.

What are the benefits and drawbacks of interchange plus pricing for businesses?

Interchange plus pricing breaks down exactly what you’re paying and where the money goes. But it’s more involved and variable than other models. Companies with significant transaction volumes often decide that the control is worth the complexity, but smaller businesses might make a different call.

Here are some of the perks and considerations of interchange plus pricing:

• Line item transparency: You see exactly what goes to the bank, what goes to the network, and what goes to your processor. This visibility helps teams verify pricing and negotiate with confidence.

• No extra markup: You pay the true cost of each transaction. If a debit card has a low interchange rate, you benefit from that directly, without any overcharges blended in.

• Cost control: At a high sales volume, fine-tuning can have a broad impact. Interchange plus pricing lets you benefit from small optimizations such as encouraging lower-cost payment methods and improving data submission to qualify for better interchange categories.

• Flexible scaling: As your volume increases, markups can often be renegotiated. This makes the pricing model more flexible than a fixed-rate plan. If you’re processing enough volume, even shaving off 10 basis points can add up fast.

• Variable costs: With this pricing model, your monthly effective rate will shift depending on your customers’ card mix. If you’re used to budgeting for a flat rate, this can take some adjustment.

• More complicated reconciliation: Fee transparency makes cost statements more detailed. This is great for finance teams, but others might not want to spend so much time getting to the profit.

What level of visibility comes with interchange plus pricing?

Interchange plus pricing provides high visibility. Reporting gives you a detailed list of exactly what you paid and who got what.

On your statement, you’ll see all three subfees: interchange rates (by card type), network assessments, and the processor markup.

This clarity makes auditing easier for finance teams. It also reveals opportunities to enhance card mix or transaction routing and flags unexpected cost shifts right away.

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