Interchange-plus vs flat-rate calculator
Every page that ranks for this question is published by a company that sells interchange-plus processing, so every one of them concludes switch. None of them computes the point where that stops being true. This calculator returns a break-even monthly volume and a break-even average ticket, which means it can also tell you to stay exactly where you are.
Your business
Average ticket $60.00
Flat-rate offer
Interchange-plus offer
A typical US small-business mix is 1.7% to 2.1%. Use your statement's figure if you have it.
Set this to zero if the provider charges none. It moves the break-even more than anything else.
Interchange-plus saves
$165.00
$1,980.00 a year at this volume.
Break-even
You are above the break-even, so interchange-plus is worth quoting. Ask for the markup in basis points and the full list of monthly fees before you compare.
Interchange is a range, not a number: the networks publish rate tables by card type, merchant category and channel. Replace the estimate with your statement’s figure for a real answer.
Worked example
$18,000 a month across 300 transactions, flat rate 2.9% plus 30 cents against interchange-plus at 0.30% plus 10 cents over an estimated 1.85% interchange
Flat-rate costs $612.00 a month. Interchange-plus costs $417.00 plus $30 of monthly fees, so $447.00. You save $165 a month, and the break-even sits at $2,769 of monthly volume, so at $18,000 a month you are well past the point where switching pays.
What the two models actually are
Flat-rate pricing charges one percentage for every card, regardless of what that card costs the processor. A debit card that costs the network well under 1% and a premium rewards card that costs over 2% are billed to you identically. The processor keeps the difference on the cheap ones.
Interchange-plus passes the real network cost straight through and adds a disclosed markup on top, usually quoted as a percentage plus a per-transaction fee, for example interchange plus 0.30% plus 10 cents. You see exactly what the networks took and exactly what the processor took.
Interchange-plus is nearly always structurally cheaper at the same volume, because you stop subsidising the processor on debit and low-cost cards. What it adds is monthly fees, a more complicated statement and, often, an application process rather than instant signup.
Where the break-even actually sits
The break-even is the monthly volume at which the rate saving from interchange-plus equals the monthly fees it charges. Below it, flat-rate wins. Above it, interchange-plus wins. Published answers to this question range from $5,000 a month to $10,000 a month, and they contradict each other because the answer depends on your numbers rather than on a rule.
Two inputs move it more than anything else. Your card mix: the more debit you take, the sooner interchange-plus wins, because debit is where the flat rate overcharges most. And your average ticket: a low average ticket means more transactions per dollar of volume, which makes the per-transaction fee side of both models matter more than the percentage.
The calculator returns the break-even volume for your inputs, so you get a number rather than a rule of thumb, and you can see how far above or below it you currently sit.
When flat-rate is genuinely the right answer
Below the break-even, flat-rate is not a compromise, it is correct. Paying $30 a month in fees to save $18 a month in rate is a loss, however good the underlying pricing looks.
Flat-rate also wins on things this calculator cannot price. No underwriting wait. No contract or early termination fee. A predictable bill, which matters more to some businesses than a lower one. And no statement to audit, which has real value if nobody in the business wants that job.
The honest framing is that interchange-plus is a better deal that costs more to run. Above the break-even, that trade is worth making. Below it, it is not.
Why the interchange figure here is a range
Visa and Mastercard publish interchange as downloadable rate tables, not as a feed, and the rate depends on card type, merchant category, channel and how the transaction was authorised. There are hundreds of categories.
Any calculator that returns a single precise interchange number for an unknown merchant is presenting a guess as a fact. This one uses a band, defaulting to a typical US small-business blend, and lets you replace it with the real figure off your own statement if you have it. The output moves with the input, which is how it should be.
Assumptions and limits
- Interchange defaults to an estimated blended 1.85% plus assessments, a typical US small-business mix. Replace it with your statement's actual figure for a real answer.
- The comparison prices processing only. It does not price the underwriting wait, contract terms or statement complexity, all of which are real costs of switching.
- Break-even assumes your card mix and average ticket stay roughly constant as volume grows.
- This is an estimate from the figures you entered, not a quote. Your processor statement is the authority on what you actually pay.
Frequently asked questions
- Is interchange-plus cheaper than flat rate?
- Above your break-even volume, almost always, because you stop paying a flat percentage on debit cards that cost the network far less. Below it, the monthly fees on an interchange-plus account cost more than the rate saves. The break-even depends on your card mix and average ticket, which is what the calculator works out.
- At what volume should I switch to interchange-plus?
- Published answers range from $5,000 to $10,000 a month, and both can be right for different merchants. Enter your own volume, transaction count and monthly fees above and the calculator returns your break-even rather than a rule of thumb.
- What is interchange-plus pricing?
- A pricing model where the processor passes the card network's interchange and assessment costs through at cost and adds a separate, disclosed markup, usually a percentage plus a per-transaction fee. It is the most transparent of the common models.
- What is wrong with tiered pricing?
- Tiered pricing sorts transactions into qualified, mid-qualified and non-qualified buckets defined by the processor, not the networks. Because the processor decides which transactions land in the expensive buckets, two statements with identical headline rates can cost very different amounts. It is the model most likely to produce a surprising effective rate.
- Can I get interchange-plus at low volume?
- Yes. Several providers now offer interchange-plus with no monthly minimum, which moves the break-even down considerably. If the monthly fee is zero, interchange-plus wins at essentially any volume, so the fee is the number to ask about first.
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