Interchange-Plus

Also called cost-plus, interchange pass-through, IC+, pass-through pricing

Pricing where interchange and network fees pass to you at actual cost and the processor's markup is stated as a separate, fixed number.

What it is

Interchange-plus quotes your cost as two components: the actual interchange and assessments for each transaction, passed through unchanged, plus a stated markup - for example, interchange + 0.30% + $0.10. The markup is the processor's entire compensation on processing. Nothing else moves. The practical effect is that your statement becomes auditable. You can see which interchange category each transaction hit, what the networks charged, and precisely what the processor added. Two competing interchange-plus offers can be compared honestly, because the only variables are the basis points and the per-item. Typical 2026 SMB markups run 15 to 50 basis points plus $0.05 to $0.15 per transaction, depending on volume, risk and how much service and software comes with it. For calibration, published wholesale buy rates for an ISO sit around 5 to 10 basis points plus $0.02 to $0.05 per transaction, so a 25 to 40 basis point markup is a normal, defensible margin - not a rip-off, and not free. The structural advantage is directional. When interchange falls, you capture it automatically. The 2026 MDL 1720 settlement's 10 basis point average reduction, any Regulation II debit rebuild, any Level 2 or Level 3 optimization you implement - all of it flows to an interchange-plus merchant and to nobody else. That is why large merchants have been on this model for decades and why it is the honest default for small ones.

Why it matters to your business

Moving from tiered to interchange-plus typically saves a small merchant 40 to 80 basis points with no change to hardware, funding times or customer experience. As an illustration, on $50,000 a month that is $200 to $400 a month, $2,400 to $4,800 a year. But the bigger reason is the next five years. Between the settlement interchange cuts, the pending Regulation II case, and every optimization you might implement, there is a real amount of savings heading toward merchants. Interchange-plus is the only pricing model where any of it reaches you. On tiered or flat-rate you are, structurally, not a participant.

Where it gets contested

Interchange-plus is not automatically honest. Three games are common and worth naming. First, padded pass-through: the processor marks up assessments or invents network fees inside the 'interchange' side of the equation, so the stated markup looks tight while the real one isn't. Second, ancillary loading: a 15 basis point markup surrounded by a $19 statement fee, a $25 monthly minimum, a $15 PCI fee and a $99 annual fee produces a worse effective rate than 35 basis points clean. Third, the bait-and-drift: a genuine interchange-plus rate at signing, followed by rate reviews that add basis points via a notice buried in a monthly statement message. The industry's counter-argument to interchange-plus generally is that small merchants find it confusing and would rather have one number. Sometimes true. But confusion is a training problem with a one-page fix, and no merchant has ever been confused by the sentence 'they charge me interchange plus thirty basis points and ten cents.' The reason tiered pricing survives in the SMB channel isn't merchant preference. It's residual economics.

How to check it yourself

Ask for the offer in this exact form: 'interchange + X basis points + $Y per transaction, and here is the complete list of every other fee.' Then verify on the first statement that the interchange lines match published network categories and that the markup line is a separate, visible number. If the statement shows only a blended rate, you were not actually put on interchange-plus.

Receipts

Claims above that are checkable, with where to check them. Published so you do not have to take anyone's word for it.

On interchange-plus, network-level interchange reductions flow through automatically; on tiered or flat-rate they do not
merchantcostconsulting.com ↗
Representative wholesale buy rates run 5-10 bps + $0.02-$0.05 per transaction
strictlyzero.com ↗
Every merchant on flat-rate or tiered pricing would capture none of a lower rebuilt debit interchange; interchange-plus merchants would capture all of it
cooley.com ↗