What is Interchange Plus Pricing Model? Fees & Rates

Are you a business owner struggling to figure out the the best possible way to save some bucks on credit card processing fees? We know that each month, a chunk of your hard-earned money is going towards processing fees, sometimes this amount seems unpredictable. (That’s the moment where Phozellpay comes into play with our interchange plus pricing model!) Feeling relatable right? but you are not alone. Many businesses out there are facing the same & finding cost-effective payment processing solutions.

That’s where interchange plus pricing comes in, it offers you a more straightforward way to understand what you’re paying and why. Need explanation? Read till the end & explore how you can save money using the interchange plus pricing model. 

What Is Interchange Plus Pricing?

At its core, interchange plus pricing is a payment processing model that breaks down the payment processing fee into two; one is the interchange fee (set by card networks like Visa and Mastercard) and a fixed markup charged by your payment processor. This is something different from flat-rate pricing models that usually bundle everything into one opaque fee (We will be comparing both below). 

Now the interchange fee we say above is the fee the banks charge for facilitating the transaction. The amount of fee depends on the type of card used the transaction method, and several other factors. The “plus” part in the “interchange plus” is the processor’s fee. The markup you’re agreeing to pay for the services by the payment processor. With interchange plus pricing, you see exactly what the interchange rates are and how much your processor is adding on top. This is why we call it the TRANSPARENT PRICING MODEL.

How Does Interchange Plus Work?

Let us go deep and share with you the secrets that sometimes cause loss to business owners, especially the owners of small businesses. One of the biggest pain points for business owners is the hidden fees that often come with flat-rate pricing models. If you are using the Flat rate pricing model you end up paying the same fee for every transaction and what happens in the end? there is no transparency and it becomes difficult to understand whether you’re being overcharged.

Now what Interchange Plus does is it takes the mystery out of the equation by taking out the interchange fee from the processor’s markup. Doing this you will be navigating each transaction and you will be aware of the amounts you are paying for. Phozellpay believes in fairness & transparent agreements this is what we have been doing for decades in this business. There number of happy clients who leveled up their business using our payment processing & merchant account services. 

Well, let’s get back to the topic & explore more about “what is interchange plus pricing” with the help of a practical example: If you sell a product for $100, and the interchange fee for that transaction is 1.8%, you’ll pay $1.80 to the bank. If your payment processor charges a 0.3% fee, that adds another $0.30 to your cost, making the total charge $2.10. Now see, you’re not left wondering how much you’re actually paying to the bank & the payment processor. 

Why Merchants Love Interchange Plus Pricing?

I know some businesses who are literally frustrated due to a lack of clarity with traditional flat-rate models. processors charge a fixed fee for every transaction without knowing & even letting business owners know about the actual interchange-plus rates. Suppose, the flat fee is 3%, but the interchange rate is 1.5%, you’re paying 1.5% more than you would with Interchange Plus pricing. 

But if you use interchange-plus only pay the actual interchange fee set by the card networks, plus a fixed markup rate set by the credit card processors & that remains constant. This will help merchants trace where actually is their money going. 

Reason Why Phozellpay Recommends & Offers Interchange Plus Pricing

Phozellpay recommends & offers the interchange plus pricing model because we have seen business owners ending up frustrated because of un-fair pricing strategies set by their previous payment processors, but when they worked with us using the interchange plus pricing model they found their business more beneficial in the long run. Using the interchange Plus Pricing model we give merchants the flexibility to negotiate lower fees as their transaction volume grows. You get real-time reporting tools that can track each penny down to the cent. 

Comparison of Interchange-Plus With Other Pricing Models

When we compare the interchange pricing model with other pricing models like flat-rate pricing we see the benefits are clear. Flat-rate pricing might seem simple & straightforward but its actually a package that will remain fixed every time you pay. Which sometimes leads you to overpay on lesser transactions as well. 

But the interchange plus is in reality the simpler & the more straightforward method than you think. The actual cost of processing each transaction is sent directly to the merchant account, with a consistent markup added by the payment processor. 

Bottom Line for Merchants & Business Owners

You are running your business which is not a piece of cake we know that. Each penny costs sometimes hours of headaches. As a business owner, you deserve pricing that works for you, not against you. The best part about Interchange Plus Pricing is that it aligns with your business needs. It gives you full control over your transactions & payments. When you shake hands with Phozellpay we become partners for the long run. Don’t let hidden fees cut into your profits choose Interchange Plus Pricing and see the difference for yourself. You are amazing just like your business. We believe in Clear Pricing, Happier Merchants!