Flat Rate vs. Interchange-Plus Pricing - Which Saves More in 2025?

Credit card processing fees can be confusing - especially for small businesses navigating tight margins. In 2025, two dominant pricing models remain at the center of the debate: flat rate pricing and interchange-plus pricing. But which one actually saves you more money this year? Let’s break it down.

What Is Flat Rate Pricing?

Flat rate pricing means your business pays the same percentage fee for every transaction, regardless of the card type. For example:

• 2.75% per transaction (typical with providers like Square or PayPal)

• No monthly fees (often appealing to very small or seasonal businesses)

Pros: Simple, predictable, easy to understand.
Cons: Often more expensive for businesses with higher sales volumes.

What Is Interchange-Plus Pricing?

Interchange-plus pricing separates fees into two components:

1. Interchange fee (set by card networks like Visa/Mastercard)

2. Processor markup (the “plus” part, e.g., 0.30% + $0.10 per transaction)

Pros: More transparent, potentially cheaper at higher volumes.
Cons: More complex to understand, monthly fees may apply.

Real Cost Example (2025 Comparison)

Let’s assume a business processes $20,000/month in card transactions:

• Flat Rate (2.75%)
  → Fees: $550/month

• Interchange-Plus (1.80% + $0.10)
  → Fees: Approx. $415/month

That’s a savings of $135/month (or $1,620/year) with interchange-plus — enough to cover software, marketing, or even staff training.

However, if you process less than $5,000/month, a flat rate plan (from $19/month) might actually be cheaper overall, since you avoid fixed monthly charges.

 Which Businesses Benefit Most?

• Flat Rate (best for):

• Low-volume businesses (under $5K/month)

• Seasonal sellers

• Freelancers and startups who value simplicity
  
  

• Interchange-Plus (best for):

• Established businesses processing $10K+ per month

• Companies with diverse card usage (rewards, corporate cards, etc.)
  
  

Merchants seeking long-term savings and transparency

Related Reading

To explore more cost-saving strategies and compliance factors, check out:

• Cheapest Credit Card Processing Options for Small Businesses in 2025 — for entry-level plans starting from $19/month.

• Credit Card Processor Comparison by Business Type: Best Features & Use Cases (2025 Guide) — see which model works best for your industry.

• Credit Card Processing Changes 2025 – What Small Businesses Need to Know — stay compliant as regulations evolve.

Final Verdict: Which Saves More in 2025?

• Flat Rate = Best for beginners, low-volume merchants, and those who want zero complexity.

• Interchange-Plus = Best for scaling businesses who want transparency and bigger long-term savings.

Bottom Line: If you process more than $10K per month, interchange-plus pricing usually saves more. For micro-merchants, flat rate options starting from $19/month may still be the simplest and most cost-effective.

For a deeper dive, check out our Ultimate Guide to Card Processing in 2025.

ScaleUp Tip

Key Takeaway -

• Flat Rate = Predictability, higher cost at scale

• Interchange-Plus = Transparency, best for high-volume merchants