Two businesses can pay very different amounts to accept exactly the same card payments, and the difference often lies less in the rate than in how the price is built. A single rate per transaction is simple to understand and budget. A price broken into its components is harder to read but shows exactly what you're paying for, and can be cheaper or dearer depending on the cards your customers use.
This guide explains the layers inside every card transaction's cost, the pricing models built from them, and how to decide between them. It's most relevant to businesses taking card payments internationally or at large volume; in India, most merchants are quoted a rate per payment method, which our guide to MDR charges covers in detail.
The three layers of a card payment's cost
Whatever the pricing model, the money from each card payment is shared between the same parties:
| Layer | Paid by | Paid to | Set by |
|---|---|---|---|
| Interchange | The acquirer (merchant's bank) | The issuer (cardholder's bank) | The card network's published schedules, within any legal caps |
| Scheme or network fees | The acquirer (and separately the issuer) | The card network | The card network |
| Acquirer or processor margin | The merchant | The acquirer or payment provider | Your contract |
Merchants don't pay interchange to the issuer directly. As Visa explains on its fees page, interchange is a transfer between acquiring and issuing banks, and merchants pay their own provider a merchant discount that covers it. Pricing models differ in how much of this they show you.
Interchange isn't one number. It varies with the card type (debit, credit, premium, commercial), whether the card is domestic or foreign, how the payment was taken (in person or online, with or without strong authentication), the merchant's category, and the region. That's why two merchants with the same contract can have different average costs.
The pricing models
Providers package these layers in a few standard ways:
| Model | What you see | Good for | Watch out for |
|---|---|---|---|
| Blended (flat) | One percentage, sometimes plus a fixed fee, for all cards or per method | Predictability, simple reconciliation, smaller volumes | You pay the same on cheap and expensive cards; the provider prices in the risk of an expensive mix |
| Interchange plus (IC+) | Actual interchange per transaction, plus one markup that includes scheme fees | Transparency on the biggest component | Scheme fees hidden in the markup |
| Interchange plus plus (IC++) | Actual interchange, plus actual scheme fees, plus the provider's markup | Full transparency; often cheapest for low-interchange card mixes at volume | Complex statements; cost varies month to month |
| Tiered | Transactions sorted into a few tiers with different rates | Some markets still offer it | The provider decides which tier each card falls in |
A worked comparison
Here's how the same three payments look under blended and IC++ pricing. The rates are invented to show the arithmetic, not real interchange or scheme fees, which depend on network, region and card type.
| Payment | Interchange | Scheme fees | Markup | IC++ total | Blended at 1.8% |
|---|---|---|---|---|---|
| Consumer debit card | 0.20 | 0.10 | 0.30 | 0.60 | 1.80 |
| Consumer credit card | 0.30 | 0.10 | 0.30 | 0.70 | 1.80 |
| Premium or commercial card | 1.80 | 0.15 | 0.30 | 2.25 | 1.80 |
| Total for the three | 3.55 | 5.40 |
With this mix, IC++ is cheaper overall, but the premium card costs more than the blended rate. A business whose customers mostly use premium, commercial or foreign cards could find IC++ costs more than a blended rate. The answer always depends on your own card mix, which is why you should ask providers to price your last few months of transactions under each model.
Where regulation shapes interchange
In some regions, interchange is capped or regulated, which changes the comparison:
- In the European Union, the Interchange Fee Regulation (EU) 2015/751 caps interchange on consumer debit cards at 0.2% and consumer credit cards at 0.3% of the transaction value, for payments where both the issuer and acquirer are in the EU. Commercial cards fall outside the caps. The same regulation requires acquirers to offer and charge merchant service charges individually specified by card category and brand ("unblended") unless the merchant asks in writing for blended pricing.
- In the United States, the Federal Reserve's Regulation II limits debit card interchange for large issuers.
- In India, merchants generally see a merchant discount rate per payment method, and the rules for UPI and RuPay are set separately. Our guide to MDR charges explains the current position.
Where interchange is capped low, IC++ pricing tends to show how small the regulated part is and how much of the cost is scheme fees and margin. Payments with foreign cards are often outside domestic caps, which matters for businesses selling internationally. Our guide to local acquiring explains how where a payment is processed affects its cost.
Reading an IC++ statement
IC++ statements are long because they're itemised. To check one:
- Group transactions by interchange category (card type, region, channel) and check the volume and rate in each.
- List the scheme fees separately. There are many, some per transaction and some per period; ask your provider for a glossary of the ones that appear.
- Check the markup against your contract, per transaction and in total.
- Compute an effective rate: total fees divided by total volume, per method and overall. That's the number to compare across providers and months.
- Reconcile the fees on the statement with what was actually deducted from your settlements. Our reconciliation guide covers fee mismatches.
Which model suits you?
There's no universally cheaper model. Some rules of thumb:
- Low volume, or a need for predictable costs: blended pricing is simpler and the difference may not justify the effort.
- High volume with mostly consumer cards in regions with capped interchange: IC++ often saves money and shows exactly where it goes.
- A mix heavy in premium, commercial or foreign cards: model both carefully; blended pricing may protect you.
- Multiple providers: IC++ data per transaction lets you compare true costs and route on them.
Whatever you choose, negotiate the part that's actually negotiable: the markup. Interchange and scheme fees are set by networks; the provider's margin is set by your contract.
Pricing and routing
Cost is one of the signals a routing engine can use when several providers can take a payment. To do that well, it needs each provider's actual pricing for each kind of payment, not a single headline rate, and it should only prefer the cheaper provider when success rates are comparable: a cheaper failed payment isn't a saving. Our guide to smart routing explains how cost fits alongside success rate. LILPE's intelligent routing page describes using cost from merchant-entered pricing as part of ranking, and our pricing page explains how LILPE's own fees are structured.
Frequently asked questions
What is interchange plus plus pricing?
A card pricing model in which the merchant pays the actual interchange for each transaction, plus the actual card network (scheme) fees, plus a separately stated markup for the acquirer or payment provider. It's the most transparent model, and costs vary with the cards customers use.
What is the difference between interchange plus and interchange plus plus?
Interchange plus shows actual interchange and one markup that also covers scheme fees. Interchange plus plus shows interchange, scheme fees and the provider's markup as three separate items.
Is blended pricing more expensive than interchange++?
Not necessarily. Blended pricing averages costs across all cards, so it can be cheaper for businesses whose customers use many premium, commercial or foreign cards, and dearer for those using mostly low-interchange consumer cards. Compare both models on your own recent transactions.
Who sets interchange fees?
Card networks publish interchange schedules, within any limits set by regulators in a region, such as the EU caps on consumer card interchange. Interchange is paid by the acquirer to the card issuer; merchants pay it indirectly through their provider's fees.
What are card scheme fees?
Fees charged by card networks for using their network, paid by acquirers and issuers. In interchange plus plus pricing they're passed through to the merchant as separate line items; in other models they're included in the rate.
Go deeper
Official sources
- Visa — Interchange reimbursement fees (merchant regulations and fees)Interchange is a transfer between acquiring and issuing banks; merchants pay a merchant discount to their financial institution. Visa publishes its US interchange tables.
- EUR-Lex — Regulation (EU) 2015/751 on interchange fees for card-based payment transactionsCaps of 0.2% (consumer debit) and 0.3% (consumer credit) per transaction (Articles 3 and 4); unblending of merchant service charges (Article 9).
- Federal Reserve — Regulation II (Debit Card Interchange Fees and Routing)
Last reviewed . Examples, amounts and screens marked illustrative are not LILPE figures.
