Choosing a payment processor gets confusing when one proposal offers a simple flat rate and another advertises interchange-plus pricing. Each can sound like the better deal until you try to work out what your business would actually pay.
The useful comparison starts with the same sales activity, the complete fee schedule and the services you need. Here is how to put the two models side by side before deciding whether a change makes sense.
What flat-rate pricing gives you
Flat-rate pricing generally bundles processing components into a published charge for a category of payments, often a percentage plus a fixed amount per transaction. That can make estimating costs more straightforward.
Check which payments qualify for each rate. In-person, online, manually entered and international-card payments may have different charges. For example, Square’s fee documentation separates rates by payment method and plan. A business taking payments at a counter and through invoices should account for both.
Also ask what sits outside the transaction price. Software, equipment or optional services can affect the total. The complete written offer should tell you what is included.
What interchange-plus pricing gives you
Interchange-plus separates underlying payment costs from the provider’s markup. The full calculation generally includes interchange, applicable network charges and the processor’s agreed fees. Stripe explains these pricing components.
Interchange is part of the cost structure between financial institutions. Your business pays its provider under your merchant agreement; interchange alone is not your complete acceptance cost. Visa explains that distinction.
A proposal’s advertised markup therefore needs to be read alongside the underlying charges. Your mix of cards and transaction types affects the estimate. Ask the provider to identify the assumptions and show the complete calculation, including any recurring charges.
How the better-priced option can change
Consider two fictional offers for a business with an average card sale of $50:
- Offer A, flat-rate: 2.7% plus $0.10 per completed sale, with no monthly account fee.
- Offer B, interchange-plus: underlying costs and provider markup together are estimated at 2.2% plus $0.10 per completed sale, with a $25 monthly account fee.
These are invented figures for illustration, not Platinum pricing or current offers from a named provider. Offer B’s 2.2% is an assumed combined variable cost for this example, not just its markup or a guaranteed rate.
| Monthly card sales | Completed sales | Offer A | Offer B estimate |
|---|---|---|---|
| $2,000 | 40 | $58 | $73 |
| $20,000 | 400 | $580 | $505 |
At $2,000 in sales, Offer A costs $15 less. At $20,000, Offer B’s estimated cost is $75 lower because the lower variable cost outweighs its monthly fee.
For example, Offer B’s second row is $20,000 × 2.2%, plus 400 × $0.10, plus $25: a total of $505.
The example holds average ticket and payment mix constant and leaves out other costs. A real comparison must add all applicable charges and use realistic underlying-cost estimates. There is no universal monthly sales threshold that makes one pricing model the winner.
Build the comparison around your business
Give each provider the same recent statements and ask them to model the same activity. Include a quieter month and a busier month if your sales are seasonal.
Your comparison should account for:
- Monthly card sales and transaction count.
- Average sale amount and the types of cards accepted.
- In-person, online and manually entered payments.
- Recurring account charges and any minimums.
- Software, equipment and other services included in each offer.
Keep occasional charges visible and avoid counting bundled fees twice. Ask how refunds, disputes and unsuccessful payment attempts would be charged under the actual agreement.
If you need a starting point for your existing statement, our guide to calculating credit card processing costs explains how to establish a consistent baseline.
Check what a change would involve
Before signing, ask for written answers to three practical questions:
- What would we need to replace or change? Confirm compatibility with your actual point-of-sale or business software and identify any equipment or setup expense.
- What commitments would we take on? Review the term, renewal rules, cancellation obligations and any separate equipment agreement.
- Who would help us when a payment issue arises? Establish the support contact and escalation process for the proposed service.
Include switching costs in the decision. If the estimated ongoing difference is small, equipment expense or additional administrative work could outweigh it. A detailed comparison may support changing providers, renegotiating your current arrangement or keeping a setup that already serves you well.
Get a comparison you can use
Platinum Payment Processing can help you understand your current charges and evaluate payment options against your business needs.
Request a free merchant analysis to discuss your current setup or a proposal you are considering. We will review the available information, explain the costs we identify and help you decide what to ask next. Any potential savings depend on your actual processing activity and confirmed terms.
