Every percentage point in fees matters. A business processing $30k a month that shaves 1% off its rate saves $300 a month, $3,600 a year, and $10,000+ over three years. Knowing how you are charged is one of the highest-leverage things a merchant can do.
The four pricing models
- Flat-rate - one fixed rate per sale (e.g. 2.6% + 10c with Square). Simple and predictable, but often too expensive as you grow.
- Interchange-plus - the true interchange rate plus a set processor markup (e.g. interchange + 0.30% + 10c). Transparent and scales well, though statements are harder to read.
- Tiered - transactions sorted into qualified, mid-qualified and non-qualified buckets. Looks cheap up front, but most rewards cards land in the pricier tiers.
- Subscription - a flat monthly fee for wholesale rates plus a low per-transaction fee (e.g. $99/month + interchange + 8c). Best for high volume.
Fees to watch
Beyond the model itself, look out for monthly account fees, setup and cancellation fees, chargeback fees of $15-$25 per case, and PCI compliance charges. Ask for a full schedule so bogus junk fees do not slip through.
Matching a processor to your business
Low volume usually favors flat-rate; high volume favors interchange-plus or subscription. Online-only sellers lean toward Stripe or PayPal, while in-person merchants get more from Square, Clover or Helcim. If you process over $10,000 a month you can often negotiate custom pricing, minimize chargebacks, and steer customers toward lower-cost debit or ACH.