Guides

Interchange Plus vs Tiered Pricing, Side by Side

October 9, 2026

Interchange plus vs tiered pricing comes down to where the processor's markup sits. Interchange-plus passes the card networks' interchange and network fees through at cost and adds a markup you can see on every statement, while tiered pricing sorts each sale into qualified, mid-qualified or non-qualified buckets at rates the processor sets, folding the markup into each bucket where it's hard to check.

Flat-rate pricing is a third option, one rate for nearly every card. The worked example below prices one illustrative month all 3 ways.

The 3 layers in every card sale

Interchange, set by the card networks

Interchange goes to the bank that issued your customer's card. Mastercard describes its interchange rates as fees paid by acquirers to card issuers, and Visa calls interchange a transfer fee between financial institutions. You don't pay it directly. Your processor's bank, the acquirer, pays it and builds it into the merchant discount you pay.

The networks publish their rates, and the rate depends on the card and on how you take it. Visa's current table, effective April 18, 2026, has separate rates for traditional, rewards and premium credit cards, for business cards and for debit. In a 2009 report, the Government Accountability Office (GAO) found that card-not-present sales carry higher rates because of the higher risk of fraud, and Mastercard lists merchant category and the time between authorization and clearing among the factors its rates depend on.

Debit splits in two. Cards from banks with $10 billion or more in assets are regulated under the Federal Reserve's Regulation II, and Visa lists regulated debit at 0.05% plus 21 cents, with 1 more cent for issuers that certify they meet fraud-prevention standards. Cards from smaller, exempt banks have their own rates. An exempt Visa debit card taken in person at a retail counter is listed at 0.80% plus 15 cents, and the same card keyed in by hand is 1.65% plus 15 cents.

Network fees

Visa and Mastercard also charge fees of their own, separate from interchange. These network fees, also called assessments, show up as their own lines on a detailed statement. GAO describes these cost-plus statements as listing interchange categories, network fees and the acquirer's fees.

The processor's markup

What's left after interchange and network fees is the processor's share. In GAO's description, the acquirer keeps the balance of the merchant discount to cover its costs. This is the layer you negotiate.

How interchange-plus pricing works

Interchange-plus, also called cost-plus, passes interchange and network fees through at cost and adds a markup stated as a percentage, a per-transaction fee or both. For illustration, interchange plus 0.25% and 8 cents. Every interchange line can be checked against the networks' published tables.

Network changes pass through in both directions. Mastercard says its rates are typically updated twice a year. Visa's current table includes Small Merchant rates for qualifying businesses under a $280,000 cap on yearly Visa consumer credit sales. On interchange-plus, a lower category like that reaches you directly.

How tiered pricing works

On a tiered plan, the processor sets 3 rates and decides which cards go in each bucket. The buckets come from the processor's own schedule, separate from the networks' interchange tables.

Qualified. The lowest rate, for the cards the processor treats as standard.
Mid-qualified. A higher rate. For illustration, rewards cards, or keyed sales with the billing ZIP code checked.
Non-qualified. The highest rate. For illustration, business cards, keyed sales without extra data, or a batch closed late.

The bucket rate bundles interchange, network fees and markup into one number, so the markup changes from card to card and never appears on its own line. A regulated debit card with interchange of 0.05% plus 21 cents can be billed at the full qualified rate. When a sale misses the qualified bucket, the difference can show up as a separate mid-qual or non-qual surcharge.

Where flat-rate pricing fits

Flat-rate pricing charges one rate on nearly every card, sometimes with a separate rate for keyed or online sales. GAO calls this a blended rate, one that includes both interchange and the acquirer's fee and may not show interchange on the statement at all. It's predictable and easy to read. The tradeoff is that a cheap debit card costs you the same as a premium rewards card, and the processor keeps the difference.

If you're choosing a POS that comes with its own processing, ask which pricing model it uses and whether you can bring your own processor. Our Clover vs Square and Toast vs Square comparisons lay out 3 common systems.

A worked example, with illustrative numbers

Every number in this section is an illustration, rounded for readability. Real interchange depends on the exact card, your merchant category and how each sale is taken.

Picture one month at a counter-service business with $40,000 in card sales over 2,000 transactions, a $20 average ticket.

Card type	Sales	Transactions	Illustrative interchange	Interchange cost
Regulated debit	$14,000	700	0.05% + $0.22	$161.00
Basic credit, in person	$8,000	400	1.55% + $0.10	$164.00
Rewards credit, in person	$14,000	700	1.85% + $0.10	$329.00
Business cards and keyed sales	$4,000	200	2.65% + $0.10	$126.00
Total	$40,000	2,000		$780.00

Now price the same month 3 ways, with illustrative terms for each model.

Pricing model	Illustrative terms	Monthly cost	Effective rate
Interchange-plus	$780.00 interchange, $96.00 network fees at 0.14% + $0.02, and $260.00 markup at 0.25% + $0.08	$1,136.00	2.84%
Tiered	1.89% qualified on debit and basic credit, 2.49% mid-qualified on rewards, 3.39% non-qualified on business and keyed, plus $0.15 a transaction	$1,200.00	3.00%
Flat rate	2.70% + $0.10 on every sale	$1,280.00	3.20%

What the illustration shows:

Interchange-plus comes in $64 a month under tiered and $144 under flat rate, or $768 and $1,728 a year.
Debit is where the gap comes from. The $14,000 in regulated debit carries $161.00 in interchange and costs $285.60 all-in on interchange-plus. The tiered plan bills it $369.60, and the flat rate bills it $448.00.
On the other card types the 3 models land closer. Flat rate even wins on business cards and keyed sales, $128.00 against $161.60, so a mix heavy in those cards narrows the gap.

How to choose by business type and average ticket

Average ticket decides which fee matters

The per-transaction fee hits small tickets hardest. For illustration, here is what a $0.10 per-transaction fee adds as a share of the sale.

Average ticket	$0.10 as a share of the sale
$5	2.00%
$20	0.50%
$100	0.10%
$500	0.02%

Small tickets, like coffee counters, quick service and convenience stores. Compare per-transaction fees as closely as the percentage. For illustration, 3 extra cents on 300 sales a day is $9 a day, or $270 over 30 days.
Large tickets, like furniture, auto repair, contractors and medical offices. The percentage does the damage. If customers pay with company cards, look hard at business card pricing, since GAO found commercial cards generally carry higher interchange.
Low or seasonal volume. When monthly fees are a big share of a small volume, a flat rate with no monthly fees can come out ahead. Run it both ways.
Restaurants and bars. If servers add tips after the card is authorized, batch timing matters on any plan. See restaurant POS systems.
Retail. If you sell online as well as in the store, those card-not-present sales price higher. See retail POS systems.

A simple way to decide

Steady volume with a real mix of debit and rewards cards. Interchange-plus is the model you can audit, and on a mix like the example above it costs less.
Small or unpredictable volume. A flat rate can land close enough to be worth the simplicity. Price your own month before you decide.
Already on tiered. Ask for the bucket list in writing and price your last statement on interchange-plus terms.

Price your own month

Before you compare offers, read our guides to hidden credit card processing fees and how to read a merchant statement, then see how the pieces add up on our POS pricing page. A rate review applies the same math to your own statements.

Boston Point Of Sales is an independent broker, so we compare card-processing rates across several POS brands using your real statements, not a sample month. The quote is free, and there's no pressure to sign.

Start with Get My Free Quote.