In general, payment service providers will offer you 3 main pricing plans. There is no best option for all cases. It depends on your business growth, transaction type, and volume to choose the right pricing model.
Flat rate or blended pricing
Regardless of your customer card type, you’ll pay a fixed fee for each transaction. This fee structure makes an affordable, reasonable, and transparent budget – a suitable choice for small and start-up businesses.
Interchange-plus or cost-plus pricing
This model has 2 parts: the markup determined by the credit card processor and the interchange fee set by the card network. You can choose to pay a flat markup fee by a fixed amount or percentage. This is suitable for most companies and easier to budget options for scale-up and large businesses.
Subscription or membership pricing
Like interchange-plus, merchants only need to pay a flat monthly fee, which covers assessment and interchange fees. For markup fee, you’ll pay 5–10 cents per transaction. This model is a great option for small and growing businesses.
We summarize the credit card processing fee comparison by pricing model in the table below, which considers the most popular payment service providers in the market.
Company | Pricing model | Credit card payment processing rates |
Square | Flat rate | 2.6% + $0.10 (retail) |
Stripe | Flat rate | 2.9% + $0.30 (online) |
PayPal | Flat rate | 2.7% (retail) |
Payline Data | Interchange-plus | Interchange + 0.2% + $0.10 (retail) |
Dharma | Interchange-plus | Interchange + 0.15% + $0.07 (retail) |
Fattmerchant | Subscription | Interchange + $0.08 (retail) |
Payment Depot | Subscription | Interchange + $0.15 |
Let’s analyze an example to distinguish the credit card processing fees of these pricing models better. Imagine that you have monthly transactions as follows:
- 100 transactions of $200
- 100 transactions of $100
- 100 transactions of $50
- 100 transactions of $10
Here is how you pay for the processing fee according to your chosen pricing model.
Flat rate | Interchange plus | Subscription | |
Sample interchange rate | N/A (included) | 1.81% | 1.81% |
Processor markup (retail) | 2.6% + $0.10 | Interchange + | Interchange + $0.15 |
Monthly service fee | $0 | $10 | $49 |
Processing fee for one $10 transaction (100x) | $0.36 | $0.30 | $0.33 |
Processing fee for one $50 transaction (100x) | $1.40 | $1.11 | $1.05 |
Processing fee for one $100 transaction (100x) | $2.70 | $2.11 | $1.96 |
Processing fee for one $200 transaction (100x) | $5.30 | $4.12 | $3.77 |
Total monthly processing fee | $976 | $774 | $760 |
This clearly proves that:
- Flat rate is suitable for small retail, but not good for a high volume of transactions.
- SMEs with higher transaction values may prefer subscription or interchange-plus pricing.
