Interchange-plus pricing is a credit card processing model where the merchant pays the actual card network interchange fee on every transaction, plus a transparent markup from their processor. It is the most honest way to pay for card acceptance, you see exactly what each component costs, and for most merchants doing meaningful volume, it works out cheaper than flat-rate pricing like Square's 2.6% or Stripe's 2.9%.
The two pieces of an interchange-plus fee
Every interchange-plus transaction has two distinct cost components, billed separately on your statement:
- Interchange. The fee the card-issuing bank charges to compensate for the cost and risk of issuing the card. Set by the card networks (Visa, Mastercard, Discover, American Express). Varies by card type, whether the transaction is in-person or online, your merchant category, and the size of the transaction. Typical in-person debit transactions interchange somewhere around 0.05% + a few cents. Typical premium rewards credit cards can interchange over 2.5%.
- The plus markup. What the merchant processor charges to keep the lights on and make a margin. This is the only piece the processor controls. A competitive markup for small-to-medium merchants is in the range of 0.20% to 0.50% plus a flat 10 to 20 cents per transaction. CoreGateway uses 0.50% plus 15 cents per transaction.
Total fee equals interchange plus the markup. Both are shown line-by-line on a clean interchange-plus statement, so you can see exactly where every penny went.
How interchange-plus is different from flat-rate
Flat-rate pricing, what Square, Stripe, and PayPal use for most merchants, rolls interchange and the processor markup into one number. Square's published in-person tap rate is 2.6% + 10 cents. Stripe's online rate is 2.9% + 30 cents. The merchant pays the same rate regardless of what card the customer hands them.
That sounds simple, and it is. The catch is that flat-rate processors price their flat rate to cover the most expensive cards plus a margin. So on every cheap card (debit, low-tier credit), the merchant pays much more than the underlying interchange. That gap is the processor's profit.
Interchange-plus does not have that gap. You pay the actual interchange (cheaper on debit, more on rewards) plus the same small markup either way. As your volume grows or your card mix tilts toward debit, the savings compound.
An honest example
Imagine a small business processing 10,000 dollars a month over 250 transactions, with a card mix of roughly half debit and half consumer credit.
- Flat-rate (2.6% + 10 cents per transaction): 10,000 x 0.026 = 260 in percentage fees, plus 250 x 0.10 = 25 in per-transaction fees. Total: about 285 a month.
- Interchange-plus (assume blended in-person interchange around 1.65% for this mix, plus 0.50% + 15 cents markup): 10,000 x 0.0215 = 215 in combined percentage fees, plus 250 x 0.15 = 37.50 in per-transaction fees. Total: about 252 a month.
About 33 dollars a month in savings on a small merchant, before accounting for a CoreGateway monthly platform fee. Scale that to 50,000 a month in volume and the savings can compound into hundreds of dollars per month. Actual interchange varies by card type and merchant category, the exact number depends on your real card mix.
When interchange-plus does not win
Honest answer: interchange-plus is not always the right choice. Two cases where flat-rate might be the better pick:
- Very small monthly volume. If you process under a few hundred dollars a month, the monthly platform fee that comes with most interchange-plus accounts (often 10 to 25 dollars) can eat the savings. The break-even is usually somewhere around 1,000 to 3,000 a month depending on the platform fee.
- You value extreme simplicity over the lowest cost. Flat-rate gives you one number to remember and predictable budgeting. Interchange-plus statements have more line items. Some merchants prefer the simpler bill even if they pay a little more.
For any merchant doing 5,000 a month or more, interchange-plus is almost always the cheaper option. That includes the vast majority of real small businesses.
How to read an interchange-plus statement
Three things to look for on a transparent interchange-plus statement so you know you are getting what you signed up for:
- Interchange shown separately. You should see the actual interchange charged per transaction (or summarized by category), not just one bundled rate. If the statement only shows a single percentage, you are not actually on interchange-plus, you are on a tiered or bundled plan dressed up to look like it.
- The markup clearly labeled. The processor's portion (the plus) should be a named line item, typically something like “Discount Rate” or “Platform Fee.” You should be able to read it and know exactly what you are paying for processor margin.
- Per-transaction fees broken out. The flat fee per transaction (e.g., 15 cents) should be its own line so you can verify it against your contract.
If your statement does not show those three things separately, ask your processor for an interchange-plus statement. If they will not provide one, you are not on interchange-plus pricing.
How to switch to interchange-plus
The switch is straightforward but requires going through underwriting at a new merchant account provider. Three steps:
- Apply for a new merchant account. Submit your business info, EIN, bank details, and processing history. Standard low-risk approvals happen in 1 to 3 business days.
- Integrate the new gateway. Swap your current checkout, virtual terminal, or hosted page to point at the new processor. CoreGateway provides a REST API and a hosted payment page for fast integration.
- Cut over. Migrate stored cards (if any) via the customer vault, set up recurring billing schedules, and switch your production traffic. The previous processor's account stays available as a fallback until you sunset it.
Most merchants complete the full switch within 5 to 10 business days.
The bottom line
Interchange-plus pricing is the most honest credit card processing model. You pay the actual card network cost, plus a small transparent markup, and you can verify both on your statement. For most merchants doing more than a few thousand a month in card volume, it works out cheaper than flat-rate pricing like Square or Stripe.
If your current statement shows one bundled rate and no separate interchange line, you are likely paying more than you need to. Switching to interchange-plus is the most direct way to cut your processing costs without changing how your business actually accepts payments.