Interchange Plus Pricing

 Interchange plus pricing is a transparent and straightforward pricing model used in credit card processing. It consists of two main components: interchange fees and a markup.

Interchange Fees: Interchange fees are set by the card networks (such as Visa, Mastercard, Discover, and American Express) and are paid to the card-issuing banks for each transaction. These fees are non-negotiable and vary depending on factors like the type of card used (e.g., debit, credit, rewards), the risk associated with the transaction, and the method of processing (e.g., swiped, keyed-in, online).

Markup: The markup is the additional fee charged by the payment processor or merchant service provider (MSP) for their services. In an interchange plus pricing model, this markup is presented as a fixed percentage or a flat fee above the interchange rate. This markup covers the costs and profit margin for the payment processor.

In summary, interchange plus pricing breaks down the cost of credit card processing into two components: the interchange fee (set by the card networks) and the markup (set by the payment processor). This model offers transparency to merchants, as they can see exactly how much they're paying in interchange fees and how much the processor is charging as a markup. It's often preferred by businesses that value transparency and want to ensure they're getting a fair deal on their credit card processing fees.