Payment processing fees can reduce your revenue every time a customer pays by card. Understanding how these fees work and how different pricing models affect your costs, can help you choose the right payment processor for your business.
There are two common payment processing pricing models: flat rate pricing and interchange plus pricing.
Flat rate pricing offers predictable transaction fees, while interchange plus pricing separates the underlying transaction costs from the payment provider’s markup. The best option depends on your transaction volume, average sale amount, payment methods, and business needs.
For businesses using Salesforce, choosing the right merchant services provider can also help connect payment processing with existing sales, billing, and customer management workflows.
What Are Payment Processing Fees?
Payment processing fees are the costs businesses pay to accept credit and debit card payments. These fees typically include several components charged by different parties involved in a transaction.
Who Gets a Share of Payment Processing Fees?
Three main parties contribute to the cost of processing a card payment:
The card-issuing bank: The customer’s bank charges an interchange fee for handling the transaction and assuming certain payment-related risks.
The card network: Networks such as Visa, Mastercard, and American Express charge network or assessment fees for facilitating transactions.
The payment processor or provider: The provider facilitates payment processing and may add its own markup or service fees.
Together, these costs make up the processing fees a business pays. Depending on the provider and pricing model, fees may be charged as a percentage of the transaction, a fixed amount per transaction, or a combination of both.
Other costs may apply, including monthly account fees, chargeback fees, equipment costs, or gateway fees. Businesses should review their full merchant services agreement rather than comparing transaction rates alone.
What Is Flat Rate Payment Processing?
Flat rate pricing charges a consistent published rate for a category of transactions, regardless of the specific interchange cost of each card.
For example, a provider might charge 2.9% plus $0.30 per transaction for certain online payments. Actual rates vary by provider, payment method, and transaction type.
How Does Flat Rate Pricing Work?
With flat rate pricing, the provider combines its processing costs and markup into a single rate. Instead of calculating each transaction’s underlying interchange and network fees separately, the business pays the stated rate for eligible transactions.
For example, if a customer makes a $100 purchase at a rate of 2.9% plus $0.30, the processing fee would be $3.20.
This makes it easier to estimate processing costs and reconcile payment expenses.
What Are the Advantages of Flat Rate Pricing?
Flat rate pricing can be a good fit for businesses that value simplicity and predictable costs.
Benefits include:
Easy-to-understand pricing: One published rate makes transaction costs easier to estimate.
Simpler reconciliation: Businesses do not need to review separate interchange and markup components for every transaction.
Straightforward setup: Flat rate plans can be convenient for smaller businesses or those with lower payment volumes.
Predictable fees: Costs are generally easier to forecast when the same rate applies to the transactions being processed.
What Are the Disadvantages of Flat Rate Pricing?
The main drawback is that flat rate pricing may cost more than other models for some businesses.
Because the provider bundles different processing costs into a single rate, a business may pay the same rate for transactions that have significantly different underlying costs. Businesses processing a high volume of payments may benefit from a more detailed pricing structure.
However, flat rate pricing is not always more expensive. The actual cost depends on the provider’s rates, the business’s transaction mix, and any additional fees.
What Is Interchange Plus Payment Processing?
Interchange plus pricing separates the underlying transaction costs from the payment provider’s markup. Businesses pay the applicable interchange fees, network fees, and an agreed processor markup.
The pricing structure provides more visibility into how processing costs are calculated.
How Does Interchange Plus Pricing Work?
Under interchange plus pricing, each transaction has its own underlying costs. These depend on factors such as the card used, how the payment is accepted, and the transaction category.
A simplified example might look like this:
- Interchange fee: 1.8%
- Network fee: 0.1%
- Processor markup: 0.3%
- Total processing cost: 2.2%
These figures are illustrative only. Actual interchange, network fees, and processor markups vary by transaction and provider. Some network fees may also be assessed differently from a simple percentage.
Unlike flat rate pricing, the total processing rate can change from one transaction to another.
What Are the Advantages of Interchange Plus Pricing?
Interchange plus pricing can be attractive to businesses that want greater cost transparency and opportunities to optimize processing expenses.
Benefits include:
Greater transparency: Businesses can see the underlying processing costs and the provider’s markup separately.
Potential savings: Some businesses may pay less than they would under a flat rate plan, depending on their transaction mix and negotiated markup.
Better cost analysis: Detailed statements can help businesses identify expensive transaction types and review their payment methods.
Scalability: Businesses with higher processing volumes may be able to negotiate more competitive processor markups.
What Are the Disadvantages of Interchange Plus Pricing?
Interchange plus pricing can be more complicated to understand and forecast.
Transaction fees may vary based on card type, payment method, and applicable interchange categories. Monthly statements can also be more detailed, requiring additional review to understand total costs.
The provider’s markup is only one part of the total expense, so businesses should compare the complete cost of each plan before switching.
What Is the Difference Between Flat Rate and Interchange Plus Pricing?
The main difference is how processing costs are presented and charged. Flat rate pricing bundles costs into a published rate, while interchange plus pricing separates underlying transaction costs from the processor’s markup.
| Feature | Flat Rate Pricing | Interchange Plus Pricing |
|---|---|---|
| Fee structure | One published rate for eligible transactions | Interchange and network fees plus processor markup |
| Cost transparency | Simpler, but less detail on underlying costs | More visibility into cost components |
| Predictability | Generally easier to forecast | Total rate varies by transaction |
| Potential savings | Depends on the provider and transaction mix | May offer savings for some businesses |
| Statement complexity | Generally simpler | Generally more detailed |
| Best suited for | Businesses prioritizing simplicity | Businesses prioritizing transparency and cost analysis |
Neither model is automatically the cheapest. The right choice depends on how your business accepts payments, how much you process, and the full fees charged by the provider.
What Factors Affect Payment Processing Fees?
Even businesses using the same pricing model may pay different effective processing rates. Several factors influence the final cost.
1. Card Type
Different cards have different interchange rates. Rewards credit cards and some commercial cards can carry higher interchange fees than certain debit cards.
The exact cost depends on the card program, transaction details, and applicable interchange category.
2. Payment Method
How a customer pays can affect processing costs.
Card-present payments: Transactions accepted in person, such as through a supported payment terminal, may qualify for lower interchange rates when they meet applicable requirements.
Online payments: E-commerce transactions may have different rates because the card is not physically presented.
Keyed-in payments: Manually entered card details may carry different costs and risk considerations.
Not every card-present transaction is cheaper than every online transaction, but payment method is an important factor in pricing.
3. Industry and Business Type
Some industries face higher processing costs because of their risk profile, transaction characteristics, or the types of payments they accept. Rates and eligibility vary by provider and merchant category.
4. Chargebacks and Disputes
Chargebacks can create additional costs, including dispute fees. A high level of disputes may also affect a merchant’s risk assessment or eligibility for certain processing terms.
Clear billing, accurate transaction records, and effective customer communication can help businesses manage disputes.
5. Transaction Volume and Average Sale Amount
Processing volume may affect the pricing a provider is willing to offer. Businesses with higher volumes may have opportunities to negotiate processor markups or other fees.
Average transaction size also matters. For example, a fixed fee of $0.30 represents a larger percentage of a $10 transaction than a $100 transaction.
6. Additional Merchant Account Fees
The transaction rate is not always the full cost of accepting payments. Businesses should check for monthly account fees, payment gateway fees, terminal costs, chargeback fees, and other charges that may apply.
Comparing the effective processing rate, including applicable additional costs, provides a more accurate picture of total expenses.
Which Payment Providers Offer Flat Rate or Interchange Plus Pricing?
Many popular payment providers offer flat rate pricing for at least some of their standard plans. Examples include Stripe, Square, PayPal, and Shopify Payments. Their available pricing structures and rates vary by product, region, and merchant eligibility.
Traditional merchant account providers commonly offer interchange plus pricing, although availability and terms differ.
Businesses should verify each provider’s current pricing and contract terms rather than assuming a provider offers only one model. Some providers offer multiple plans or negotiated pricing depending on the business.
When comparing providers, look beyond the advertised rate. Consider the complete fee structure, supported payment methods, integration requirements, reporting tools, customer support, and the ability to scale with your business.
How Can Salesforce Businesses Choose the Right Payment Processing Model?
For businesses that manage sales, invoices, and customer relationships in Salesforce, payment processing decisions involve more than transaction rates. The right setup should also support the way the business operates.
Consider these factors when evaluating merchant services:
Processing volume: Review monthly card volume and the number of transactions you process.
Transaction mix: Compare the types of cards and payment methods your customers use.
Total cost: Calculate the effective processing rate and include applicable account, gateway, and service fees.
Salesforce compatibility: Confirm that the payment solution and processor support your required Salesforce workflows.
Payment needs: Consider whether you need in-person payments, online payments, invoicing, recurring billing, or payment plans.
Support and service: Evaluate the provider’s onboarding, troubleshooting, and ongoing support.
A business that values simplicity may prefer a flat rate plan. A business with substantial processing volume or a transaction mix that benefits from lower underlying interchange costs may want to evaluate interchange plus pricing.
The best approach is to compare actual processing statements and estimated costs under each available plan before making a decision.
How Does Kulturra Help Businesses Optimize Payment Processing?
Kulturra helps businesses using Salesforce evaluate merchant services options and connect payment processing with their Salesforce environment.
Choosing the right provider and pricing model can help businesses better understand processing costs while supporting their payment workflows.
With the right setup, businesses can:
- Evaluate flat rate and interchange plus merchant services options.
- Choose a provider based on their transaction volume, industry, and payment needs.
- Connect supported payment processing workflows with Salesforce.
- Manage payment activity alongside customer and business records.
- Get assistance with merchant services setup and ongoing support.
Rather than focusing only on the lowest advertised rate, businesses should consider total processing costs, integration needs, and the support available after implementation.
Kulturra can help businesses assess their options and find a merchant services setup that aligns with their Salesforce workflows and business requirements.
Frequently Asked Questions About Payment Processing Fees
What is the difference between flat rate and interchange plus pricing?
Flat rate pricing charges a published rate for eligible transactions, while interchange plus pricing separates underlying interchange and network fees from the processor’s markup. Flat rate is simpler to understand, while interchange plus provides more detailed cost visibility.
Is interchange plus pricing cheaper than flat rate pricing?
It can be, but not always. Interchange plus may offer savings for businesses whose transaction mix and negotiated markup result in lower total costs. Compare actual statements and all applicable fees before switching.
What is a typical payment processing fee?
Processing fees vary by provider, pricing model, card type, transaction method, and business category. Some providers advertise rates such as 2.9% plus $0.30 for certain online transactions, but this is an example rather than a universal rate.
Why do credit card processing fees vary by transaction?
Fees can vary based on the card used, how the payment is accepted, the applicable interchange category, and the provider’s pricing structure. Additional fees may also apply depending on the merchant agreement.
Can businesses negotiate payment processing fees?
Some businesses can negotiate processor markups or other merchant account terms, particularly when they have substantial processing volume. Negotiability depends on the provider, contract, and business profile. Interchange and network fees are generally determined by the relevant card networks and programs rather than individually negotiated by each merchant.
Can Kulturra help businesses choose a payment processor for Salesforce?
Kulturra helps Salesforce businesses evaluate merchant services options based on their processing needs, business requirements, and Salesforce setup. Businesses should review available providers, pricing terms, and supported integrations to identify the right fit.
The Bottom Line
Payment processing fees are made up of several costs, and the pricing model you choose can affect how much your business pays to accept card payments.
Flat rate pricing offers simplicity, while interchange plus pricing provides greater transparency into transaction costs. Neither model is universally better, so compare your actual processing expenses, payment methods, transaction volume, and additional fees before deciding.
For Salesforce businesses, the right merchant services setup should balance competitive processing costs with the payment capabilities, integrations, and ongoing support needed to run the business efficiently.
Kulturra can help you evaluate your options and connect supported payment processing workflows with Salesforce.
