Interchange plus pricing is a transparent payment-processing model where the merchant pays the actual interchange rate (set by Visa/Mastercard and published at usa.visa.com/support/small-business/merchant-resources.html and mastercard.us/en-us/business/overview/merchant-resources.html) plus a fixed processor markup — typically IC + 0.10%–0.40% + $0.05–$0.15 per transaction — instead of a blended flat rate.
Traditional flat-rate processing (e.g., 2.9% + $0.30 across all cards) bundles interchange, network fees, and processor margin into a single opaque rate. Interchange plus pricing (also called 'pass-through' or 'cost-plus') separates these components: the merchant sees the actual interchange charged on each transaction plus the processor's fixed markup. Interchange rates vary by card type, transaction method, and merchant category — Visa and Mastercard publish their full rate tables publicly (Visa: usa.visa.com/support/small-business/merchant-resources.html; Mastercard: mastercard.us/en-us/business/overview/merchant-resources.html). Debit cards carry lower interchange (often 0.05%–0.80%) than premium rewards credit cards (1.80%–3.25%). Under interchange plus, a merchant paying IC+0.25% on a debit card pays far less than on a premium Visa Infinite card. The FTC's guidance on credit card fees and merchant rights is at ftc.gov/business-guidance. The Durbin Amendment (Dodd-Frank Act Section 1075, codified at 15 U.S.C. § 1693o-2) caps debit card interchange for large issuers at 21 cents + 0.05% per transaction — enforced by the Federal Reserve under Regulation II (12 C.F.R. § 235). For merchants processing over $10,000/month in card volume, interchange plus typically produces lower effective rates than flat-rate pricing when the card mix skews toward debit and standard credit cards.
For merchants with high debit card or standard credit card volume (above ~$10K/month), yes — interchange plus nearly always wins on effective cost. For low-volume merchants or those with high premium rewards card usage, flat-rate simplicity may offset the modest savings. Run your actual card-mix numbers against IC+ quotes before switching.
Request it explicitly from your processor. Stripe, Square, and PayPal default to flat-rate for small merchants. Processors like Helcim, National Processing, Dharma, and Stax offer interchange plus. Most traditional merchant account providers (Worldpay, Elavon, Priority, TSYS) default to IC+ for merchants processing over $10K–$20K/month who ask for it.
Tiered pricing (qualified/mid-qualified/non-qualified buckets) is the least transparent model — processors define which cards fall into each tier and often downgrade premium cards into higher-cost non-qualified buckets without disclosure. IC+ shows you every interchange rate and a fixed markup. Tiered pricing is generally the worst deal for merchants; IC+ is the most transparent.