Interchange Plus Merchant Account vs Flat Rate

July 19, 2023

There is quite a bit of terminology around payment processing that merchants may not have heard of or fully understand. This article will break down the differences between an interchange plus merchant account vs flat rate.

Is There A Flat Rate Merchant Account?

From low risk, medium risk to high risk merchant accounts, payment processing rates are changing all of the time. Every payment processor and every banking institution sets their own rates.

Rates for merchant accounts depend on several factors including:

• Sales volume
• Risk of products or services
• Country of business registration
• Merchant’s credit history
• Rate of chargebacks

If you want consistency in your pricing, this is the rate for you. You can better anticipate your accountancy and understand where your fees are going. This fee won’t fluctuate on your statement. The variability is covered whether the interchange rates go higher or lower.

Some consider this “all-in” pricing. If someone says 3%, it could mean you’re paying 2.5% in interchange and the rest to your processor.

Interchange Plus Pricing

Interchange is a small fee that is paid by the merchant’s bank. It is a system to make sure that electronic payments are processed appropriately for the sake of the retailer, governments, the consumer, and society as a whole.

Interchange Plus is a common name for a type of pricing structure within card transactions by high risk industries. This interchange plus fee is a variable merchant service charge. It consists of the cost price plus a fixed markup.

You’d want interchange plus pricing if you’re looking for transparency. You see exactly what the processor margin is and what each of the card brands get. Moreover, you can see the cost of each credit card type. Bonus cards and specialty credit cards could charge more.

Better yet, if your business is using more debit transactions, your costs will be far lower. You’ll pay the same fees to your processor while only paying a maximum of 0.5% per transaction. According to Florida laws, “credit card issuers can only receive fees for debit card transactions of up to 21 cents, plus 0.05 percent multiplied by the value of the transaction, plus 1 cent for fraud prevention.”

Flat Rate Pricing

Almost every single payment transaction made online has a fee or some combination of fees that is attached to it. From percentages and splits, to flat rate pricing and fixed rates, it can be difficult to navigate the high risk payment processing space.

This flat rate pricing model has been gaining popularity in recent years. The flat rate model for credit card processing is where a business charges high risk merchants a fixed rate. This flat rate is based on the merchant’s volume, credit history, and several other factors.

Credit Card Processing Rates

With the current foundations in place for credit card transactions, the payment process is basically standardized. As a result, this makes it very difficult for payment processing companies to actually be competitive with flat rate pricing structures for merchants.

PayKings Solutions and Interchange Rates

From low risk to high risk merchants, PayKings has found interchange payment solutions at competitive rates for over ten years. Our highly experienced sales experts know the ins and outs of specialized industries to make sure all merchants get sustainable payment processing for their specific business.

Regardless of interchange plus merchant account vs flat rate or any other processing fees, PayKings reduces rates. With a combination of superior customer service and strong banking relationships, our payment solutions are ideal for your business.

Call our payment processing experts today at (727) 300-0277 to get your merchant account application started.