What is Cost-Plus Pricing? (aka Interchange-Plus Pricing)
Cost-Plus Pricing is a merchant account pricing method where a fixed markup is applied directly to the interchange rates. Interchange are the wholesale processing rates set by Visa, MasterCard, and Discover for each type of credit and debit card.
The word "Plus" refers to the processor's markup that is applied to each transaction. This markup is typically expressed as basis points. For instance, a business paying Interchange Plus .30 is paying the interchange rate for each transaction plus .30 basis points or 0.30%.
Example: 1.51% + 0.30 basis points = a total discount rate of 1.81%
Until a few years ago, Cost-Plus Pricing was only available to large corporations and publicly traded companies. But due to increased competition within the payments industry, this pricing model has been made available to all businesses regardless of their size or annual sales volume.
Cost-Plus Pricing is the most transparent and cost-effective way to process credit card payments. It can reduce monthly processing fees by up to 45%
To view the current interchange rates from Visa, MasterCard, and Discover — Click Here