Payment processing fees explained: flat rate vs interchange-plus
How card fees are built, how the main pricing models compare, and how to read a merchant statement.
Every card payment you accept is split between several parties. Knowing who takes what helps you pick the right pricing model and spot overcharging.
The three layers of a card fee
- Interchange — paid to the bank that issued the customer's card. Set by the card networks and varying by card type (debit, rewards, commercial), how the card is used (in person or online) and merchant category.
- Network or assessment fees — paid to the card network.
- Processor markup — what your processor keeps. This is the only layer you can really negotiate.
Pricing models compared
| Model | How it works | Best for |
|---|---|---|
| Flat rate | One percentage plus a fixed fee for most cards. | New and low-volume businesses that value simplicity. |
| Interchange-plus | Actual interchange and network fees passed through, plus a disclosed markup. | Established businesses with steady volume. |
| Tiered | Transactions grouped into "qualified", "mid-qualified" and "non-qualified" rates. | Rarely the best deal — hardest to audit. |
| Subscription / membership | Monthly fee plus interchange at cost and a small per-transaction fee. | Higher-volume merchants with larger tickets. |
Other fees to look for
- Chargeback fees and dispute handling.
- Monthly minimums and statement fees.
- PCI compliance or non-compliance fees.
- Equipment leases and early-termination fees.
- Payout fees for instant transfers.
Calculate your effective rate
Divide total fees on your statement by total card volume for the month. Track it monthly; if it creeps up without a change in your card mix, ask your processor why.
Compare providers in our payment processing category.
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