Quick Answer
Flat-rate pricing (e.g., 2.6% + $0.10) is simpler but often costs more for high-volume businesses. Interchange-plus (e.g., interchange + 0.25% + $0.10) passes through actual card network fees and typically saves money at $10,000+ monthly volume. Choose based on your transaction volume and average ticket size.
Flat-Rate vs Interchange-Plus: What’s the Difference?
Flat-Rate Pricing:
- Single percentage + per-transaction fee regardless of card type
- Predictable costs, easy to budget
- Common providers: Square, Stripe, PayPal
- Typical rate: 2.6% + $0.10 per transaction
- Best for: Low volume, startups, businesses wanting simplicity
Interchange-Plus (Cost-Plus) Pricing:
- Base interchange fee (set by card networks) + processor markup
- Different rates for different card types (rewards, corporate, debit)
- More transparent, shows exactly what you’re paying
- Typical markup: 0.15–0.30% + $0.05–$0.15 per transaction
- Best for: Higher volume, businesses wanting transparency
When Flat-Rate Wins
Flat-rate often makes sense when:
- Monthly processing under $5,000–$10,000
- Simple accounting and bookkeeping needs
- You prefer predictable statements
- Time spent analyzing statements isn’t worth potential savings
When Interchange-Plus Wins
Interchange-plus typically saves money when:
- Monthly processing exceeds $10,000
- High percentage of debit card transactions (lower interchange)
- You want to see exact fees breakdown
- Willing to analyze statements for optimization
Quick Comparison Example
| Metric | Flat-Rate | Interchange-Plus |
|---|---|---|
| $20,000/month volume | 2.6% = $520 | ~2.1% = $420 |
| Annual difference | — | ~$1,200 savings |
| Statement simplicity | High | Medium |
| Fee transparency | Low | High |
How to Use This in a Buying Decision
- Calculate your current effective rate (total fees ÷ total volume).
- Request interchange-plus quotes from 2–3 processors.
- Model both pricing structures using your actual transaction mix.
- Factor in any monthly platform fees that apply to interchange-plus.
Related Guides
- POS Contract Fees Checklist Before You Sign
- Restaurant POS Monthly Fee Breakdown Guide
- Retail POS Hardware vs Software Cost Planner
FAQ
Is a lower transaction rate always better?
No. Lower rates can be offset by fixed monthly fees, support bundles, or mandatory add-ons.
How often should I re-negotiate POS pricing?
At minimum, review every 6-12 months or immediately after major volume changes.
Can this replace a formal quote?
No. Use this as pre-quote planning to negotiate from a stronger position.
Next Steps
Run both pricing models through the POS System Cost Simulator using your actual transaction volume to see which saves more over time. Before committing to any contract, check POS Contract Fees Checklist Before You Sign.