The short version
Every card sale has a wholesale cost that nobody controls, and a markup that your processor decides. Interchange plus pricing puts both on your statement as separate numbers.
That is the whole idea. It sounds small. It changes everything about your ability to shop around, because for the first time you can see which part of your bill is actually up for negotiation.
What the two parts are
The interchange part is the wholesale cost. It goes to the bank that issued your customer’s card, and Visa and Mastercard set it. Every processor in the country pays the same amount for the same card. Nobody gets a discount, no matter what a salesperson tells you.
The plus part is your processor’s markup. Usually a small percentage plus a few cents per sale. This is the part they set, and the part you can argue about.
How to read it on a statement
An interchange plus statement is longer than a flat-rate one. It lists card types separately, because each one costs a different amount at wholesale. A basic debit card, a premium travel rewards card and a corporate card are three different wholesale prices, and the statement shows you all three.
Look for these three things:
- The interchange lines. Usually grouped by card type, with a rate and a count.
- The markup line. One percentage and one per-sale amount, applied to everything.
- The fixed monthly fees. Statement fees, PCI fees, gateway fees. These sit outside the pricing model entirely and are worth checking separately.
If you cannot find the markup as its own line, you are probably not on interchange plus, whatever the sales paperwork said.
A worked example
Here is the shape of the maths. The rates below are illustrative only, not typical rates:
You take $20,000 a month on cards, across 500 sales. Your average sale is $40.
| Part | How it is worked out | Amount |
|---|---|---|
| Interchange | Wholesale rate on your card mix | {{VERIFY: average interchange by card mix for a typical small in-person merchant, Canada and US}} |
| Assessments | Card network’s own cut | {{VERIFY: current Visa and Mastercard assessment rates, Canada and US}} |
| Markup | Your processor’s rate plus per-sale fee | Negotiable |
| Fixed fees | Statement, PCI, gateway | Whatever is on your bill |
We are not going to fill in those first two rows with numbers we cannot source. That is the point of this site. Put your own figures into the card fee calculator and you will get the real answer for your business instead of an average for somebody else’s.
When interchange plus is the right choice
It generally suits you if:
- You do steady monthly volume rather than occasional sales.
- Your average sale is large enough that per-sale fees are not your main cost.
- You want to be able to compare quotes properly.
- You are willing to read a longer statement once a month.
When it is not
Flat rate often works out better if:
- You are brand new and your volume is small or unpredictable.
- You take a handful of payments a month and want zero admin.
- Your monthly fees under an interchange plus deal would swallow the savings.
Canada and the United States
The model works identically on both sides of the border. Two differences are worth knowing:
- In Canada, debit runs through Interac and is usually charged as a flat amount per sale rather than a percentage. On large payments that is often the cheapest option you have. See card processing in Canada.
- In the United States, debit interchange is capped for cards issued by larger banks and not capped for smaller ones, so two debit cards that look the same can cost you different amounts. See card processing in the United States.
What to do next
Pull out last month’s statement and look for a line that says interchange, separate from a line that says something like markup, margin or discount rate. If you can find both, you are on interchange plus and you already know the number to negotiate.
If you cannot find them, the statement decoder will help you work out which model you are actually on. Or send the statement to us and one of our partners will go through it with you, for free.