Most small business owners choose their payment processor the way they choose a cell phone plan: they pick the one that sounds cheapest and move on. And just like cell phone plans, the rate that sounds cheapest often isn't.
What flat-rate pricing actually is
Flat-rate pricing charges the same percentage on every transaction regardless of card type, transaction size, or how the payment was processed. Square charges 2.6% + 10¢ in person. Stripe charges 2.9% + 30¢ online. Simple.
Here's what that simplicity is hiding: card processing actually has variable costs. A basic Visa debit card costs the processor around 0.8-1.0% in interchange. A premium airline rewards card costs around 2.1-2.4%. When you pay a flat rate that covers both, you're overpaying on every debit card transaction so your processor can make money on every rewards card transaction.
What interchange-plus pricing actually is
Interchange-plus (also called cost-plus) passes through the actual interchange rate for each transaction and adds a fixed markup on top. Your statement shows the real cost structure: interchange amount, assessment fees, and the processor's margin — separately.
It looks more complicated. It actually costs less. Because you're only paying the actual cost of each transaction plus a consistent, transparent markup.
Real example: $25K/month business
| Scenario | Flat-Rate (Square) | Interchange-Plus (Clearo) |
|---|---|---|
| Monthly volume | $25,000 | $25,000 |
| Processing fees | ~$650-700 | ~$430-500 |
| Monthly savings | — | $150-270 |
*Estimates based on typical card mix and in-person transaction profile. Actual results vary.
The crossover point
At very low volumes (under $5K/month), flat-rate is often fine. The savings from interchange-plus are small in absolute dollars and the simplicity of flat-rate has real value when you're just starting out.
The crossover typically happens around $8K-$10K/month. Above that, interchange-plus almost always wins on cost — and the gap widens as volume grows.
Why IC+ statements look more complex (and why that's a good thing)
Interchange-plus statements have more line items. You see each card type broken out separately. You see exactly what the network charged. Some business owners find this overwhelming at first.
But here's the flip side: that complexity is transparency. Every dollar is accounted for. You can verify you're being charged correctly. There's nowhere for junk fees to hide. Your Clearo rep can walk you through any statement line by line.
The verdict
If you're processing more than $8K-$10K a month and you're still on flat-rate, you're probably leaving $100-500 per month on the table. Interchange-plus isn't complicated — it's just honest. And for most businesses reading this article, it's the cheaper option.
Want a personalized comparison?
Book a call and we'll show you exactly what your current costs are vs. what they'd be with Clearo's interchange-plus pricing.
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