Payment Processing Pricing Guide
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Payment processing pricing comes in several models — each with different cost structures, transparency levels, and suitability for different business types. This guide covers every major pricing model and merchant service pricing structure so you can make an informed decision about which minimizes your processing costs. The right model depends on your monthly volume, card mix, customer base, and state. The wrong model costs you thousands of dollars per year in avoidable fees. One model not covered in depth here because it should be avoided entirely: tiered pricing — read how tiered pricing works and why it is almost always more expensive than interchange-plus. According to Federal Reserve interchange fee data, average debit interchange is significantly below what flat-rate processors charge — meaning most businesses overpay by default.
How Do Payment Processing Pricing Models Compare?
The six main payment processing pricing models are interchange-plus, flat-rate, surcharge, cash discount, dual pricing, and tiered. Each passes processing costs to the merchant or customer differently — and each has meaningful cost implications at scale. Use this side-by-side payment processing pricing comparison to see how they stack up at your volume, or read each section below for a complete breakdown.
Interchange-Plus Pricing
Interchange-plus pricing separates the card network cost (interchange) from the processor markup on every transaction. Your statement shows exactly what each card type cost and exactly what the processor charged on top. This is the most transparent payment processing pricing model and typically the most cost-effective for businesses processing more than $10,000–$15,000/month. If you are weighing whether a dedicated merchant account makes sense for your business, see do I need a merchant account.
- How it works: Interchange rate + fixed processor markup (e.g., interchange + 0.25% + $0.10)
- Best for: Most businesses with consistent card volume above $10k/month
- Pros: Full transparency, negotiable markup, lower effective rate for most card mixes
- Cons: Statement is more complex to read than flat-rate
Who it’s wrong for: Very early-stage businesses processing under $5,000/month may find that monthly account fees erode the savings available over flat-rate. At that volume, the cost difference is small enough that simplicity wins.
Quick cost example: A retail business processing $50,000/month typically achieves an effective rate of 1.8–2.0% under interchange-plus versus 2.6% under Square — saving $300–$400 per month, or $3,600–$4,800 per year, on the same transactions.
See the full breakdown: Interchange-Plus Pricing Guide →
Flat-Rate Pricing
Flat-rate payment processing pricing charges the same percentage regardless of card type. Stripe (2.9% + $0.30), Square (2.6% + $0.10), and PayPal (3.49% + $0.49) all use flat-rate models. Simple to understand but typically more expensive at volume — you overpay on debit and standard credit cards to subsidize premium rewards cards. Beyond cost, flat-rate processors like Square and Stripe operate as payment facilitators, which introduces account stability risks — see what happens when Square freezes your account for a detailed breakdown of that risk.
- How it works: Single rate applies to all transactions (e.g., 2.9% + $0.30)
- Best for: Very low volume businesses under $5,000–$10,000/month
- Pros: Simple, predictable, no monthly fees with some providers
- Cons: More expensive at volume, no visibility into actual card costs
Who it’s wrong for: Any business processing more than $15,000/month consistently. At that volume the cost premium over interchange-plus compounds quickly. For a full explanation of how flat-rate works and exactly when you have outgrown it, read flat-rate payment processing explained. For specific issues merchants encounter with Square and Stripe, see Square payment processing problems and Stripe payment processing problems.
Quick cost example: A business processing $30,000/month on Square at 2.6% pays $780/month. The same volume under interchange-plus at a 2.1% effective rate costs $630/month — a $150/month difference, or $2,520 per year.
For a side-by-side interchange plus vs flat rate pricing breakdown using your actual processing volume, the pricing model comparison calculator shows monthly and annual cost differences in real dollars. See the full breakdown: Flat-Rate Pricing Guide → | Stripe vs Merchant Account | Square vs Merchant Account | PayPal vs Merchant Account
Adoption has accelerated sharply: 34% of US small businesses added a credit card surcharge in 2025, up from 1–2% in 2019, according to the J.D. Power 2025 U.S. Merchant Services Satisfaction Study. The 2026 study put the figure at 35%, with 32% of surcharging merchants reporting that customers cancel purchases at least some of the time when a surcharge appears at checkout.
Surcharge Program Pricing
A surcharge program is a payment processing pricing model that adds a fee to credit card transactions to recover processing cost — passing the expense to the customer rather than the merchant. Surcharges are permitted by Visa and Mastercard for most businesses but are prohibited in some states and have specific disclosure requirements. Learn more about Visa surcharge rules for merchants.
- How it works: A disclosed percentage (typically 3%) added to credit card transactions at checkout
- Best for: B2B businesses, professional services, and merchants in surcharge-permitted states with credit-card-heavy transaction mix
- Pros: Can reduce or eliminate net credit card processing cost, no need to reprice products
- Cons: Not permitted in California, Connecticut, Massachusetts, and Maine — applies to credit cards only, debit cannot be surcharged
Who it’s wrong for: Businesses in restricted states, businesses with significant debit card volume (debit transactions still carry a cost), and consumer-facing retail environments where customer reaction to visible surcharges tends to be negative. Also worth noting: a chargeback on a surcharged transaction means absorbing both the reversed amount and the surcharge fee — clear client agreements reduce this risk significantly.
Quick cost example: A law firm processing $80,000/month — 90% on credit cards — currently paying $2,000/month in fees. After implementing a surcharge program, credit card cost drops to near zero and net monthly fees fall to approximately $160 (debit only) — saving roughly $22,000/year.
See the full breakdown: Surcharge Program Guide →
Cash Discount Payment Processing Pricing
A cash discount pricing program is a payment processing pricing model that offers a discount to customers who pay by cash — effectively building the processing cost into the posted price and discounting it for cash payers. Unlike surcharging, cash discount programs are permitted in all 50 states and apply to all card types including debit. Learn more about payment processing consumer protections from the CFPB.
- How it works: Posted price includes processing cost — cash customers receive a discount equal to the processing fee
- Best for: Cash-friendly businesses, businesses in surcharge-restricted states, service businesses with a meaningful cash customer base
- Pros: Permitted everywhere, eliminates net processing cost, applies to all card types
- Cons: Requires clear signage and disclosure, POS must be configured correctly
Quick cost example: A convenience store processing $25,000/month currently paying $625/month in fees. After implementing a cash discount program where 25% of customers switch to cash, card volume drops to $18,750 and net processing cost falls to near zero — saving approximately $7,000/year.
See the full breakdown: Cash Discount Program Guide →
Dual Pricing — Payment Processing Pricing
Dual pricing — also called dual rate pricing — displays two prices at the point of sale — one for cash payments and one for card payments. The card price incorporates the processing cost, allowing the merchant to recover fees on card transactions while giving cash-paying customers a lower price. Unlike surcharging, dual pricing is permitted in all 50 states and applies to all card types including debit.
- How it works: Two prices are displayed — e.g., $9.80 cash / $10.00 card. The card price covers processing cost.
- Best for: Retail, food service, and any business with a customer-facing price display where transparency and compliance simplicity are priorities
- Pros: Permitted in all states, applies to all card types including debit, maximum upfront transparency for customers
- Cons: All price displays must show both prices, requires properly configured terminal
Quick cost example: A quick service restaurant processing $40,000/month currently paying $1,000/month in fees. After implementing dual pricing, net processing cost drops to near zero — saving $12,000/year.
See the full breakdown: Dual Pricing Guide →
Convenience Fee Programs
A convenience fee pricing program is available exclusively to government agencies, educational institutions, and government-operated utilities. It passes card processing costs to the payor as a disclosed fee — resulting in zero net processing cost to the organization.
- How it works: A disclosed fee is added to card transactions for qualifying entities
- Best for: Government agencies, public school districts, municipalities, utilities, and other qualifying public entities
- Pros: Zero net processing cost, card-brand sanctioned for qualifying entities
- Cons: Limited to qualifying entity types only — private businesses cannot use this model
See the full breakdown: Convenience Fee Program Guide →
What Most Merchants Actually Choose
With six pricing models on the table, the decision can feel overwhelming. In practice, three patterns cover the vast majority of businesses — and the right one usually comes down to a single question: do you want to absorb the processing fee, or pass it to your customers?
Most merchants absorb their processing cost as a cost of doing business — they just want to pay as little as possible for it. For them, interchange-plus is the answer. It’s the lowest-cost way to absorb fees transparently, works for virtually every business type above $10,000/month, and gives you a fully verifiable statement.
Merchants who don’t want to absorb any processing cost and operate in a customer-facing in-person environment almost always land on dual pricing. It’s legal in all 50 states, applies to all card types including debit, and the upfront transparency means fewer complaints than surcharging.
Law firms, consultants, and B2B businesses in surcharge-permitted states often prefer surcharging because their clients are accustomed to paying fees on invoices and the credit-card-only limitation isn’t a problem for their transaction mix.
If you’re not sure which payment processing pricing pattern fits your business, a free statement review applies each model to your actual transaction data and shows you the cost difference in real dollars before you commit to anything. For businesses with large tickets or recurring billing, ACH payment processing is worth evaluating alongside these models — flat fees of $0.20–$1.50 per transaction regardless of amount. Once you’ve chosen a model, see how to switch payment processors without disrupting your business.
Explore Further
Frequently Asked Questions
It depends on volume. Under $10,000/month, flat-rate pricing is often simplest. Above $10,000/month, interchange-plus typically produces a lower effective rate because you pay the actual card cost plus a fixed markup — rather than a blended percentage that hides the processor’s margin.
Interchange-plus pricing passes the actual card network cost directly to the merchant — plus a fixed processor markup stated separately. Every fee is visible on your statement as a distinct line item, making it the most transparent pricing model available.
Check your processing statement. If you see one or two rates (qualified, mid-qualified, non-qualified) your pricing is tiered. If you see a flat percentage with no breakdown, it’s flat-rate. If you see interchange rates listed alongside a separate processor markup, you’re on interchange-plus. A free statement review can identify your model and what you’d pay under interchange-plus.
Which Payment Processing Pricing Model Is Right for Your Business?
The right pricing model depends on your monthly volume, card mix, customer base, and state. A free statement review from Brookside Payments applies each model to your actual transaction data — showing you exactly what each would cost at your volume before you commit to anything.
Request a Free Statement Review