Interchange-plus vs. tiered vs. flat-rate

Almost every processing quote boils down to one of three pricing models. None of them is universally 'best' — but one of them is usually wrong for you.

One posted rate on every card — e.g., 2.6% + 10¢, regardless of card type or channel.

Why it exists: simplicity. You know your rate before you swipe.

The catch: the processor is blending cheap debit transactions and expensive rewards-card transactions into one number, and pricing it so they come out ahead on average. The more your card mix skews toward debit or basic cards, the more you're subsidizing someone else's rewards card.

Best fit: very low monthly volume, simple ticket mix, or businesses that value predictability over optimization — think a seasonal pop-up or a brand-new location with no processing history yet.

You pay real interchange (whatever it actually is per transaction) plus a disclosed markup — e.g., interchange + 0.30% + 10¢.

Why it exists: transparency. You can see exactly what's wholesale cost and what's markup.

The catch: statements look more complicated, with dozens of line items instead of one number. You have to trust that the markup is what was actually disclosed — padding here is the most common way this model goes wrong.

Best fit: businesses doing roughly $15k/month or more, especially with a mixed card portfolio. At volume, interchange-plus almost always beats flat-rate.

A hybrid where transactions get sorted into buckets — 'qualified,' 'mid-qualified,' 'non-qualified' — each with its own rate.

Why it exists: historically, to let processors advertise a low 'qualified' rate while making most of their margin on transactions that get bumped into the pricier tiers.

The catch: the criteria for which tier a transaction lands in are set by the processor, not published anywhere you can check. This is the model most associated with 'downgrades.'

Best fit: honestly, rarely the best fit for anyone in 2026. If you're on tiered pricing, it's worth a review.

Your statement will usually say it, but the fastest tell is the shape of your fee lines. One flat percentage on every transaction = flat-rate. A column showing 'interchange' separately from 'discount' or 'markup' = interchange-plus. Multiple percentage rates with labels like 'qualified/non-qualified' = tiered.

If you're not sure, that's exactly what a free statement review is for.