If you’re comparing payment processors, simply looking at the advertised rate won’t tell you what you’ll actually pay. Two processors can have widely different prices for the same sale, not because they have different rates, but because they use different pricing structures.
In the context of payment processing, a pricing structure is the framework a provider uses to calculate and charge transaction fees.
This resource breaks down how payment processing pricing is structured—i.e., the different ways processors package and charge interchange, assessments, and their own markup. Instead of covering individual fees or average rates, we’ll go over the five main pricing models, how each one works, and the types of businesses they’re best suited for. After reading, you’ll know how to recognize the pricing model your processor uses, understand how it affects your costs, and choose the structure for your business.
Key Takeaways
- There are five main payment processing pricing models: interchange-plus, flat-rate, tiered, subscription (membership), and dual pricing. Each calculates and presents processing costs differently.
- The most inexpensive pricing model depends on your business. Factors such as monthly processing volume, transaction mix, and sales channels affect which model will cost the least over time.
- Interchange-plus and subscription pricing are generally the most transparent. They pass interchange through at cost and clearly disclose the processor’s markup, while tiered pricing is typically the least transparent.
- Don’t judge a processor by its advertised rate alone. Compare your effective rate and understand how your fees are calculated before choosing a provider.
- Choosing the right pricing model can reduce costs and improve visibility into your payment-processing expenses. Review your processing statement regularly to make sure your current model still fits your business.
What are Payment Processing Pricing Models?
A payment processing pricing model is the method a payment processor uses to calculate and charge your processing costs. The pricing model determines how the processor bundles interchange costs, card network fees, and its own markup into the amount you pay for each transaction.
Note that the pricing model is distinct from the credit card processing fees themselves. Every card transaction includes two underlying cost layers: interchange fees, set by the card networks and paid to the card-issuing bank, and assessment fees, set by the card brands. Payment processors don’t control these costs, but they do decide how to package them and apply their own markup.
The pricing model you choose affects how predictable your monthly costs will be and how easy it is to see what you’re paying in processor markup versus the underlying cost of accepting card payments. So which structures are out there? Here are the five you’ll actually encounter.
The 5 Payment Processing Pricing Models at a Glance
There are five main payment processing pricing models: interchange-plus, flat-rate, tiered, subscription (or membership), and dual pricing or surcharging. Each takes a different approach to combining interchange costs, card network fees, and the processor’s markup, which can have a big impact on what you actually pay. Here’s a quick overview, followed by a table to compare each model:
- Interchange-plus pricing passes the actual cost of each transaction through to you and adds a fixed markup.
- Flat-rate pricing charges the same rate for every transaction, regardless of the card used.
- Tiered pricing groups transactions into categories with different rates.
- Subscription or membership pricing combines a monthly fee, interchange at cost, and a small per-transaction fee.
- Dual pricing and surcharging reduce or shift processing costs by charging different prices depending on how the customer pays.
| Model | How it’s priced | Transparency | Predictability | Best for |
| Interchange-plus | Actual interchange and assessment fees, plus a fixed processor markup | High. The processor’s markup is clearly separated from the underlying costs. | Moderate. Costs vary by card type and transaction, so monthly totals fluctuate. | Businesses with moderate to high processing volume that want the lowest possible costs and clear pricing. |
| Flat-rate | One blended rate for every transaction, regardless of card type. | High. The rate is simple and easy to understand, though the processor’s markup is built into the price. | High. Every transaction is charged the same rate, making costs easy to forecast. | Small businesses, startups, and lower-volume merchants that prioritize simplicity. |
| Tiered | Transactions are grouped into qualified, mid-qualified, and non-qualified tiers, each with its own rate. | Low. It’s often unclear why transactions fall into certain pricing tiers. | Low. Costs can vary significantly depending on how transactions are categorized. | Businesses that value simplicity over cost optimization, though many merchants are better served by other models. |
| Subscription / Membership | Flat monthly fee, interchange and assessments at cost, plus a small fixed fee per transaction. | High. The monthly fee and transaction costs are clearly separated. | Moderate. Monthly membership is fixed, but transaction costs still vary with interchange. | Businesses with steady, higher processing volume that can offset the monthly subscription fee. |
| Dual pricing / Surcharging | Customers paying by card incur a higher price or surcharge, shifting some or all of the processing costs away from the merchant. | Moderate. Pricing is generally clear to the business, but customer-facing rules can be more complex. | High. Processing costs are reduced or partially offset when customers pay by card. | Businesses looking to minimize processing costs and willing to comply with applicable card brand rules and state laws. |
Now let’s look at each model in more detail:
Interchange-plus pricing
With interchange-plus, you pay the actual interchange and assessment fees for each transaction, plus a fixed processor markup. A processor might charge something like interchange + 0.30% + $0.10 per transaction. Because interchange rates vary by card and transaction type, your costs will vary from sale to sale.
Many businesses consider interchange-plus the most transparent model because you can see exactly what the processor is charging on top of the true cost. The downside is that your monthly statements contain more line items and can look intimidating if you’re not familiar with how interchange works.
Flat-rate pricing
Flat-rate charges the same rate for every card transaction, regardless of the card type or interchange category. For example, a processor might charge 2.9% plus $0.30 per online transaction.
The biggest advantage is simplicity: one predictable rate that’s easy to forecast. But that convenience comes at a price. Because the processor builds enough margin into the flat rate to cover every type of transaction, businesses with growing or high transaction volume often end up paying more than they would under a more transparent model.
Tiered pricing
Tiered pricing sorts transactions into categories: qualified, mid-qualified, and non-qualified, with each tier carrying its own rate. Qualified transactions typically have the lowest rates, while non-qualified transactions have the highest rates.
The challenge is that you usually don’t have much visibility into how transactions are classified, as processors have discretion over which purchases qualify for each tier. That makes your monthly costs difficult to predict and can make it harder to compare one processor with another. As such, tiered pricing is generally considered the least transparent payment-processing model.
Subscription/membership pricing
Subscription, or membership, pricing charges a flat monthly membership fee, passes interchange and assessment costs through at cost, and adds a small fixed fee for each transaction.
This model can be one of the lowest-cost options for businesses that process a steady, high volume of card payments, as lower transaction costs offset the monthly fee. For businesses with lower sales volume, though, the subscription fee may outweigh the savings. In those cases, a flat-rate plan may end up costing less overall.
Dual pricing and surcharging
Dual pricing and surcharging aim to reduce the merchant’s processing costs by passing some or all of those costs to customers who pay by card. With dual pricing, businesses display one price for cash payments and a higher price for card payments. With surcharging, the listed price stays the same, but an additional fee is added when a customer pays with an eligible credit card.
These programs can lower processing expenses, but they come with important rules. State laws, card brand requirements, and restrictions on debit card transactions all affect how these programs can be used, so businesses should understand the requirements before adopting either approach.
How to Tell Which Pricing Model You’re On
Not sure which payment processing pricing model you’re using? The easiest way to find out is to look at your monthly processing statement. Here are some telltale signs to look for:
- You’re likely on flat-rate pricing if your statement shows one consistent rate for every transaction, such as 2.9% + $0.30, regardless of the card type or how the payment was accepted. You probably won’t see separate interchange or assessment fees because those costs are bundled into the flat rate.
- You’re likely on tiered pricing if your statement groups transactions into different tiers, such as qualified, mid-qualified, and non-qualified, with each bucket carrying a different rate. If you see most of your transactions falling into the more expensive tiers and it’s not obvious why, you’re almost certainly on a tiered plan.
- You’re likely on interchange-plus pricing if your statement lists interchange fees as separate line items and applies the same processor markup to all transactions. That markup might look something like +0.25% + $0.10 on top of each transaction’s interchange cost. Because interchange varies by card type, the total cost of each transaction will vary, but the processor’s markup remains consistent.
- You’re likely on subscription or membership pricing if you pay a recurring monthly membership fee and your statement shows interchange and assessment fees passed through at cost, along with a small fixed fee for each transaction.
- You’re likely using dual pricing or surcharging if your customers either see different prices for cash and card payments or pay an additional fee for using a credit card. Your processing statement may also reference a dual pricing or surcharge program, depending on your provider.
If you’re still unsure or if your statement is difficult to read, ask your processor one simple question: “What payment processing pricing model am I on?” They should be able to tell you directly. If they can’t give you a clear answer, or the explanation is vague, that’s worth investigating. Once you know your model, the next question is whether it’s the right one for your specific payments.
Which Payment Processing Pricing Model Is Right for Your Business?
There’s no single “best” payment processing pricing model. The right choice depends on your processing volume, credit card mix, and sales channels.
The same goes for cost. While many business owners ask which pricing model is the cheapest, the answer is: it depends. A pricing model that’s cost-effective for a coffee shop processing $20,000 a month may not make sense for an eCommerce business processing $500,000 or a retailer selling primarily in-store. Here are the three biggest factors to consider:
1. Monthly card volume
Your monthly processing volume has the biggest impact on which pricing model makes financial sense.
- Low volume (generally under $10,000-$15,000 per month): Flat-rate pricing is often the easiest choice. The simplicity offsets the higher rates, and you won’t pay a monthly membership fee.
- Growing volume (roughly $15,000-$50,000 per month): This is where interchange-plus can start to outperform flat-rate pricing. As your sales increase, even small savings on each transaction can add up quickly.
- High, consistent volume ($50,000+ per month): Subscription (membership) pricing or interchange-plus will typically provide the lowest overall processing costs. The monthly subscription fee is usually more than offset by lower transaction markups. Never sign a new contract or submit paperwork without first reviewing it carefully!
2. The types of cards your customers use
Basic debit cards typically carry lower interchange costs than premium rewards, travel, or business credit cards. This card mix matters tremendously: according to the Federal Reserve’s 2026 Diary of Consumer Payment Choice, credit cards accounted for 16 of the 47 payments the average consumer made per month (34%), while debit cards accounted for 15. On top of that, consumer preference for paying with credit in person grew from 24% in 2016 to 38%.
As consumers reach for credit and premium rewards cards more often, your underlying interchange costs will naturally rise regardless of which processor you choose. That’s a primary reason interchange-plus pricing appeals to growing businesses—it allows you to clearly see the actual interchange cost of each card type versus the processor’s markup, rather than paying a single blended rate that averages higher-cost credit transactions into every sale.
3. How you accept payments
Your sales channels also influence which pricing model works best.
- Primarily in-person retail: Businesses with consistent in-store card volume often benefit from interchange-plus or membership pricing, as card-present transactions generally incur lower interchange costs.
- Online businesses: Flat-rate pricing can be attractive for smaller eCommerce merchants because it’s easy to understand, though higher-volume sellers often save by switching to interchange-plus.
- Mobile, field, or omnichannel businesses: If you sell in-store, online, at events, or on the go, look for a processor that supports all your channels under a single pricing model. That makes reporting easier and helps you avoid paying different rates across different payment systems.
| Monthly card volume | Transaction mix | Primary sales channel | Pricing model to consider | Why it fits |
| Low (<$10K–$15K/month) | Mostly debit | In-person | Flat-rate | Keeps pricing simple and predictable without a monthly membership fee. |
| Low (<$10K–$15K/month) | Mostly rewards credit cards | Online | Flat-rate | Easy to budget for while processing volume is still relatively low. |
| Growing ($15K–$50K/month) | Mostly debit | In-person retail | Interchange-plus | It lets you benefit from lower debit interchange while providing clear pricing. |
| Growing ($15K–$50K/month) | Mixed or rewards-heavy | Online or omnichannel | Interchange-plus | Makes it easy to separate higher interchange costs from the processor’s markup as volume grows. |
| High ($50K+/month) | Mostly debit | In-person retail | Subscription or Interchange-plus | Lower markups typically outweigh the monthly membership fee, especially for card-present sales. |
| High ($50K+/month) | Rewards-heavy | Omnichannel or mobile | Subscription or Interchange-plus | Offers the greatest transparency and is often the lowest-cost option for businesses processing large volumes across multiple channels. |
| Any volume | Any mix | Any channel | Tiered (use caution) | Only choose tiered pricing if the processor clearly explains how transactions are qualified and provides transparent pricing. |
Why Transparent Pricing Beats a Low Headline Rate
Some processors (particularly those that use tiered pricing) advertise an attractive rate that applies only to certain transactions, while others are charged at higher rates. That’s why you need to understand how your processor calculates your fees, not just the rate it advertises.
For most businesses, interchange-plus is the most transparent pricing model. It passes through the actual interchange and assessment fees and clearly shows the processor’s markup, making it easier to compare providers and understand what you’re paying for.
Compare your effective rate
Instead of focusing on the advertised rate, calculate your effective rate, which shows what you actually paid:
Effective rate = Total processing fees ÷ Total card sales
For example, if you processed $50,000 in card sales and paid $1,150 in fees, your effective rate would be 2.3%. Your effective rate is a better measure of cost than a headline rate because it reflects what you actually paid across all transactions. That’s the philosophy behind Kurv’s approach to pricing. Rather than relying on promotional rates or complex pricing tiers, Kurv uses transparent, risk-based pricing so merchants can clearly understand how their fees are calculated.
How Kurv Approaches Payment Processing Pricing
Kurv keeps payment processing pricing simple and transparent. Our risk-based pricing model is designed to be predictable, so you can clearly understand how your fees are calculated. Eligible merchants can also choose dual pricing to help offset processing costs. Every account includes Tap to Pay, QR payments, and a virtual terminal, along with a merchant portal and mobile app for managing transactions and reporting in one place.
Ready to compare your options?
Explore Kurv’s transparent pricing to see which plan best fits your business.
Frequently Asked Questions
What are the different payment processing pricing models?
There are five main payment processing pricing models: interchange-plus, flat-rate, tiered, subscription (or membership), and dual pricing.
Interchange-plus passes through the actual interchange and assessment fees and adds a fixed processor markup. Flat-rate pricing charges the same rate for every transaction, regardless of the card used. Tiered pricing groups transactions into qualified, mid-qualified, and non-qualified categories, each with its own rate. Subscription pricing combines a monthly membership fee with at-cost interchange and a small per-transaction fee. Dual pricing shifts some or all processing costs to customers through separate cash and card prices or a credit card surcharge.
Which payment processing pricing model is the cheapest?
There isn’t a universal cheapest option. The best choice depends on factors like your monthly processing volume, average transaction size, and the types of cards your customers use. For businesses with higher, consistent card volume, interchange-plus and subscription pricing often result in the lowest overall costs. For businesses processing fewer transactions, flat-rate pricing may be more economical because it doesn’t include a monthly membership fee.
What is the most transparent pricing model?
Interchange-plus and subscription pricing are generally considered the most transparent because they pass interchange and assessment fees through at cost while clearly disclosing the processor’s markup. Tiered pricing is typically the least transparent because processors determine how transactions are categorized, making costs harder to predict and compare.
How do I know which pricing model I’m on?
The easiest way to find out is to review your monthly processing statement. A single blended rate typically indicates flat-rate pricing, whereas qualified, mid-qualified, and non-qualified categories indicate tiered pricing. If you see interchange listed separately alongside a consistent processor markup, you’re likely on interchange-plus or subscription pricing. See the “How to Tell Which Pricing Model You’re On” section above for more details.
Can I switch payment processing pricing models later?
Yes. You can often switch to a different pricing model by renegotiating with your current processor or moving to a new provider. Before making a change, review your processing agreement for contract terms, notice requirements, or early termination fees that may apply.
What is a processor markup?
A processor markup is the amount a payment processor adds on top of interchange and assessment fees to earn revenue. Unlike interchange and assessment fees, which the card networks and card brands set, the markup varies from one processor to another.
Is the processor markup the same as credit card processing fees?
No. A payment processing pricing model is the structure a processor uses to calculate your costs, while credit card processing fees are the individual charges that make up those costs, such as interchange fees, assessment fees, and the processor’s markup.
