Flat-rate vs interchange-plus pricing for small business
There are two honest ways to price a merchant account — flat-rate and interchange-plus — plus one dishonest one to avoid. Here's how to tell which fits your business.
Flat-rate pricing
One simple number for every card — for example, 2.5% + 15¢ in person. You always know what a sale costs, statements are readable, and there’s nothing to reconcile. The trade-off is that the processor bakes a buffer into the rate to cover the pricier cards, so on cheap transactions you might pay a touch more than raw cost. For most small businesses, the predictability and the absence of junk fees more than make up for it.
Interchange-plus pricing
You pay the actual interchange (which varies by card) plus a fixed, disclosed markup — say “interchange + 0.3% + 10¢.” It’s the most transparent model because the processor’s margin is explicit and constant. The downside: statements are complex, your cost per sale moves with the card mix, and it only really pays off at higher volume where shaving the margin matters.
The one to avoid: tiered pricing
Tiered (“qualified / mid-qualified / non-qualified”) pricing looks like a low headline rate, then quietly downgrades most of your rewards-card and keyed transactions into expensive buckets. It’s designed to be hard to audit. If a quote uses these words, treat the headline number as fiction and ask for your effective rate instead.
Which should you pick?
Rule of thumb: if you’re a typical small business that values a predictable bill and no surprises, flat-rate usually wins — especially once you count the monthly junk fees that often ride along with “cheap” tiered or interchange-plus quotes. If you’re high-volume with a finance person who’ll actually audit statements, interchange-plus can edge it out.
Either way, compare on effective rate, not headline rate. Learn how in how to read your merchant statement, or see Surge’s flat pricing on the pricing page.
This guide is general information, not financial or legal advice. Card network rules and rates change — confirm the current details before acting.