Know the Figures

Interchange-Plus vs Blended Pricing

Which pricing model wins depends on your card mix. This finds the tipping point.

Replaces: Payments consultants’ model comparisons

How to use it

Enter your volume, your real interchange cost, and both offers. Blended charges one rate whatever the card; interchange-plus passes interchange through at cost and adds a stated margin. The calculator prices both and finds the interchange rate at which they cost the same.

Where the number comes from

  • Blended cost is your volume times the quoted rate, plus per-transaction and monthly fees. It does not depend on your card mix at all.
  • Interchange-plus cost is your actual interchange, plus the markup on volume, plus per-transaction and monthly fees.
  • Because only one of the two moves with your card mix, the comparison has a single crossing point.
  • The break-even interchange rate is found by solving for the interchange at which the interchange-plus total equals the blended total.
  • Below that rate, interchange-plus is cheaper because you keep the benefit of an inexpensive mix. Above it, blended is cheaper because the processor is absorbing the difference.

What goes wrong

The part most calculators leave out.

  • Your real interchange is the input that decides the answer, and on a blended statement it is invisible by design. If you are currently on blended pricing, you are guessing at the number that determines whether you should be.
  • Interchange is not one rate. It varies by card type, presence, region and merchant category, and your mix shifts with your customers — a single figure is an average that may not hold next quarter.
  • Blended quotes frequently exclude downgrades. Transactions that fail to qualify for the quoted tier are billed higher, which is how a blended rate quietly becomes worse than the headline.
  • Interchange-plus statements are longer and harder to read. The transparency only pays off if someone actually reviews them.
  • Scheme fees and assessments sit alongside interchange and are passed through under both models. They are excluded here and are small but not zero.
  • Contract length, termination fees and equipment costs often matter more than the rate difference. Neither appears in this comparison.

Why blended pricing is a bet you cannot see

A business processes 600,000 a month across 9,000 transactions, with real interchange at 1.65% plus 9 cents. A blended offer at 2.50% plus 25 cents with 25 of monthly fees costs 17,275. An interchange-plus offer at 0.45% markup plus 12 cents with 95 of monthly fees costs 14,585. Interchange-plus is cheaper by nearly 2,700 a month. The two would tie only if real interchange were around 2.10% — a mix dominated by corporate and cross-border cards. The blended processor is pricing for that possibility and pocketing the difference when it does not happen, and a blended statement is precisely the document that would never show you.

Questions

What is interchange?
The fee the card networks set and the issuing bank keeps. No processor pays less than it, which is why it is the floor under every quote regardless of pricing model.
Why would anyone choose blended pricing?
Simplicity, and genuine value where the card mix is expensive or unpredictable. A business taking mostly international corporate cards can pay less under blended pricing than the interchange alone would cost — that is the processor taking the risk.
How do I find out my real interchange rate?
If you are on interchange-plus, the statement itemises it. If you are on blended, you cannot see it directly and have to estimate from your card mix — or ask a processor to run an interchange analysis on your transaction file.
Does anything I type get sent anywhere?
No. The whole calculation runs in your browser. Nothing is transmitted, stored, or logged, and there is no account to create.

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