OnDemand WTP Pricing Research

Interchange Plus Pricing vs. Flat Rate | Pay Junction

For starters, there are more rate plans for your business to consider than just Flat and Interchange plus pricing. That said, comparing too many options at once can be overwhelming; therefore, we’re going to focus on only two plans to simplify things a bit.

If you’re just starting to accept credit card payments, a Flat rate plan might be the best to start with. If your business is more mature, Interchange plus pricing will likely be more advantageous. Let’s dive into an explanation of each option.

Flat Rate Pricing

Payment Facilitators offer their customers Flat rate pricing, so if you’re with Square, Stripe or PayPal, this is your rate plan.

Flat pricing is simple: Every transaction has the same processing cost. To make this work, though, your provider has to cover both high- and low-cost scenarios, ultimately charging more for transactions that would cost less on a different plan.

Flat pricing consists of the Interchange — or wholesale cost to run a transaction — plus a mix of fees that produce one, consistent rate. It seems simple, but with Flat pricing it’s impossible to determine what type of cards you’ve taken. As a business owner, getting a proper discount for lower cost cards is essential. For instance, debit cards have a lower Interchange cost because they’re considered lower risk. By paying a Flat rate, you end up paying more for these transaction types.

As stated above, newer businesses that turn to a Payment Facilitator due to ease of access might prefer the simplicity of Flat rate pricing, especially if their processing volume is low. However, as a business matures and accepts more credit card sales, the benefits of transparency and access to low costs for debit cards starts to make financial sense.

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Interchange Plus Pricing vs. Flat Rate.