Interchangeplus

Interchange-plus is a pricing model used by many payment processors in the credit card industry. Under this model, a merchant pays the actual interchange fees set by card networks (such as Visa, MasterCard, and American Express) plus a fixed markup charged by the processor. Interchange fees vary by card type, merchant category, transaction method, and other factors, so the total processing cost is the sum of the network’s interchange and the processor’s markup.

How it works: The card networks publish interchange rates for each card and scenario. The processor or acquiring bank collects the interchange amount from the merchant's settlement and adds a markup, which is usually a percentage and may include a per-transaction flat fee. Some processors provide itemized statements showing the exact interchange amounts and the processor’s markup separately. Markups can be fixed per transaction, a percentage of the sale, or a combination, and may differ by card type or qualification level.

Advantages and limitations: Interchange-plus is often described as more transparent than bundled or tiered pricing, because the merchant can see the actual interchange costs and the processor’s margin. It can be cost-effective for merchants with a mix of card types and high transaction volumes. However, because interchange rates vary, total costs can fluctuate month to month, and some processors’ markups or non-qualified categories can add complexity. Merchants should review statements carefully and compare pricing across processors.

Relation to other models: It contrasts with flat-rate or bundled pricing, where the processor charges a single rate regardless of card type, and with tiered pricing, which groups interchange into broad rates. Interchange-plus is commonly used by merchants seeking transparency and potential cost savings with diverse card use.