Interchange-plus vs. flat-rate pricing: which card fee model fits your salon?
A plain-English guide to the three ways card processing is priced (interchange-plus, flat rate and tiered) and how to work out what you really pay.
Short answer: Interchange-plus charges the real card-network cost plus a fixed processor markup, so it is transparent and usually cheaper for shops with steady card volume. Flat-rate pricing (one percentage for every card) is simpler but often costs more. Tiered pricing is the hardest to control.
What makes up a card processing fee?
Every card payment splits its fee three ways:
- Interchange: paid to the bank that issued the card. The networks set it, and it varies by card type (debit, credit, rewards, business) and by how the card is taken (tap, chip or keyed in).
- Network fees: a small amount to Visa, Mastercard, Discover or American Express.
- Processor markup: the only part you can negotiate.
The first two are nearly the same everywhere. Processors differ in the third part and in how they bundle the three into a quote.
What is interchange-plus?
With interchange-plus, your statement shows the true cost of each transaction and then adds the processor's markup, usually a small percentage plus a few cents per transaction, written like "interchange + 0.15% + 10¢".
The big advantage is visibility. When a customer pays with a low-cost debit card, you get that low cost instead of paying a blended rate.
What is flat-rate pricing?
Flat rate is one price for every card, such as a percentage plus a few cents. It is easy to understand and predict, which suits brand-new shops or very low card volume. The downside: on debit and standard cards the real cost is much lower than the flat rate, and you pay the difference.
Why be careful with tiered pricing?
Tiered pricing sorts transactions into buckets such as "qualified", "mid-qualified" and "non-qualified", each with its own rate. The processor decides which bucket a transaction lands in, so the advertised qualified rate looks low while many transactions are billed at higher tiers. If your statement shows those words, read it closely.
How to calculate what you really pay
- Pull your latest monthly statement.
- Add up every fee, including monthly, equipment and PCI fees.
- Find the total amount processed that month.
- Divide total fees by total processed. That is your effective rate.
Use the effective rate to compare quotes. Advertised percentages leave out the extra fees.
Which model should you choose?
| Situation | Usually fits |
|---|---|
| Steady monthly card volume, want transparency | Interchange-plus |
| Just opened, low card volume, want simplicity | Flat rate |
| On tiered pricing and can't read the statement | Ask for an interchange-plus quote to compare |
Kashela connects directly to your card terminal, so every transaction's amount, tip and transaction ID match the ticket. Reconciling your monthly statement takes minutes instead of hours. See salon pricing.
Frequently asked questions
What is interchange?
Interchange is the fee set by the card networks and paid to the bank that issued your customer's card. No processor can discount it.
Should a small salon use interchange-plus?
Usually yes, if you take cards steadily every month. It is more transparent and often cheaper as card volume grows.
How do I find what I actually pay?
Divide the total fees on your monthly statement by the total amount you processed. That number is your effective rate.