What interchange actually is
Every time a card is swiped, tapped, or keyed, a fee moves from your acquiring bank to the issuing bank — the bank that gave your customer their Visa or Mastercard. That fee is interchange. It is not processor profit. It is not PayMullet profit. It is a transfer between banks, published quarterly in tables that anyone can download.
Visa alone publishes more than 60 distinct interchange categories. A regulated debit card — one issued by a bank with more than $10 billion in assets, subject to the Durbin Amendment — carries an interchange rate of 0.05% plus $0.21 per transaction. A Visa Infinite rewards card, issued by a large bank to a high-spending consumer, can carry 2.40% plus $0.10. The spread between those two numbers is where most billing confusion lives.
The Visa USA Interchange Reimbursement Fees schedule is public and updated quarterly. You should have it bookmarked.
Tiered pricing: the oldest trick in the business
Tiered pricing takes all those interchange categories and collapses them into three buckets: qualified, mid-qualified, and non-qualified. The processor assigns a rate to each bucket. Then — and this is the part that matters — the processor decides which bucket every transaction falls into.
The "qualified" rate is what gets quoted in the sales pitch. It is usually around 1.69–1.79% plus $0.10 per transaction. It sounds reasonable. But only card-present, swiped, non-rewards, debit-or-basic-credit transactions consistently land there. Any transaction using a rewards card, a business card, or a card-not-present entry gets bumped to mid-qualified (often 2.20–2.50%) or non-qualified (often 2.75–3.50%).
A restaurant with a dinner-crowd clientele carrying travel rewards cards is going to see the majority of its volume land in mid- or non-qualified. The processor never has to disclose how it makes that call. The rate table in your contract is technically accurate. The outcome is structurally expensive.
The worked example: $35,000/month restaurant
Take a full-service restaurant running $35,000 a month in card volume, average ticket $47, roughly 745 transactions a month. Assume a realistic card mix: 30% regulated debit (Durbin-eligible), 40% consumer credit, 30% rewards or business cards.
On tiered pricing at a "qualified" rate of 1.79% + $0.10:
- Most consumer credit and rewards cards get downgraded to mid-qual at 2.40% + $0.10.
- Business cards and high-end rewards hit non-qual at 3.10% + $0.10.
- Blended effective rate typically lands at 2.75–2.95%.
- At 2.85% effective on $35,000: $997.50/month in processing fees.
On interchange plus at interchange + 25 bps + $0.10:
- Regulated debit passes through at ~0.05% + $0.22 (Durbin cap).
- Consumer Visa credit passes through at ~1.51% + $0.10 (Visa CPS/Restaurant).
- Rewards cards pass through at their actual interchange, say 2.10% + $0.10.
- Blended effective rate typically lands at 2.35–2.50%.
- At 2.45% effective on $35,000: $857.50/month in processing fees.
That is a $140/month difference, or $1,680 per year — for the exact same card volume. The only thing that changed was the pricing model.
Interchange plus: how it actually works
Interchange plus (also written IC+) passes each transaction's actual interchange rate through to you at cost, then adds a single fixed markup — expressed as basis points of volume plus a per-transaction cent amount. You see every line on your statement.
A typical markup for a mid-volume merchant: interchange + 20 bps + $0.10. That means if a Visa Rewards card carries 1.80% interchange, you pay 2.00% + $0.10 on that transaction. No reclassification. No tier judgment. The processor's markup is identical on every transaction.
This model has two advantages the tiered model structurally cannot match:
- Auditability. You can pull the Visa/Mastercard interchange tables and verify every line on your statement. If a transaction is classified incorrectly, you can dispute it with documentation.
- Savings on low-cost cards. When a customer pays with a regulated debit card, you get the benefit of that 0.05% + $0.21 interchange. On a tiered plan, that savings disappears into the processor's margin.
The disadvantage: IC+ statements are longer and require more literacy to read. That is a feature for informed merchants, not a bug.
How to read your current effective rate
Your effective rate is the simplest health check on your current pricing. Find it in two steps:
- Divide total processing fees (including all monthly minimums, PCI fees, and transaction fees) by total card volume for the month.
- Multiply by 100 to express as a percentage.
If your effective rate is above 2.70% and you are a card-present restaurant or retail business, you are almost certainly overpaying. If it is above 3.00%, you have a serious problem — either tier abuse, junk fees, or both.
PayMullet offers a free statement audit that extracts every line item and benchmarks it against current interchange tables. You send the PDF; we send back the math.
Assessment fees: what is not negotiable
On top of interchange, the card networks charge assessment fees on all volume processed over their networks. These are not negotiable and are not processor profit. They are:
- Visa: ~0.14% of volume
- Mastercard: ~0.1375–0.14% of volume
- Discover: ~0.105% of volume
- Amex OptBlue: ~0.165% of volume
A processor who is charging you "assessments" above these published rates is marking them up. That is legal, but it is worth knowing. On a well-structured IC+ plan, assessments are passed through at cost with zero markup.
When tiered pricing is not a disaster
Tiered pricing is not always the wrong choice. It can make sense when:
- Volume is very low (under $5,000/month), where the simplicity of a flat bucket reduces billing confusion.
- The card mix is overwhelmingly Durbin-regulated debit — restaurants near college campuses, small convenience stores.
- The processor is offering a genuinely competitive qualified rate AND has a contractual obligation to specify how cards are classified.
None of those conditions apply to most SMBs, which is why tiered pricing is the dominant pricing model sold to merchants who do not know to ask for IC+.
The take
If you are running more than $10,000 a month in card volume and you are on tiered pricing, you are almost certainly paying more than you should. The math is not complicated — it is just opaque by design.
Interchange plus is not a special deal. It is the standard that processors offer businesses with enough volume to ask for it. You have enough volume to ask for it.
Start with your statement. Pull your effective rate. If it is above 2.65%, talk to PayMullet — or at minimum, read our guide to auditing your processing statement before your next renewal.
This is general business information, not legal or financial advice.