A merchant has several options for credit card processing rates. At times, they may seem a little overwhelming and challenging to digest. You may have to consider a range of options including tiered pricing, membership pricing, and flat-rate pricing. Moreover, you must figure out which of these options will support business growth and which one offers the best contract terms, fees, and processing rates.

There is so much to worry about but we shall focus on flat-rate credit card processing only. It is increasingly becoming popular among merchants.

What is Flat Rate Credit Card Processing?

The most challenging part of accepting credit card payments is to determine your cost. A flat rate system is an exciting option because it helps in figuring out precisely what it will cost your business.

Flat-rate credit card processing simplifies your problems. It sets out fixed pricing at a flat rate, allowing businesses to predict their credit card processing costs accurately.

Presently, the percentage system is the most common type of flat-rate credit card processing. Here, the processor takes a fixed percentage from the value of your business transactions.

Average Fees For Flat Rate Credit Card Processing

As of October 2019, the flat rate average fees for swiped transactions typically range from 2.75% to 3.5%. There may also be a transaction-based fee of about $0.20-0.30 for every transaction.

Processors usually offer a flat rate percentage system as the most competitive option without any unnecessary surprises. But the flat rate mostly fails to deliver in terms of competitiveness even though there are no unwanted surprises.

It is known that flat-rate credit card processing makes your costs predictable. But credit card processing does not work this way. The credit card processor can not remain competitive or even remain in the business if it is giving you the best flat rate.

It can be competitive to some extent with other flat-rate providers. But if we compare it with all other credit card processing options, it is impossible to compete. You need to go through the ways credit card processing works to understand this concept.

How Credit Card Processing Works?

For every credit card transaction completed through you, your credit card processor pays some interchange fees to the issuing bank. The issuing bank is the one who issued the said credit card.

Several factors determine the rate of interchange fees. The rates offered by issuing banks may vary due to the following factors:

  • Type of card: Credit card or debit card
  • Type of transactions: In-store or online
  • Nature of item purchased
  • Several other such variables

Besides, they have to pay minimum network fees and markup fees. Remember that your credit card processor makes money through the markup fees.

Mostly, the interchange rates create the maximum problem and merchants find it hard to predict their service costing. As a result, the flat-rate system has become more popular.

Flat rate pricing is easy to understand as it bundles up all types of fees including interchange rates. The monthly statements are simple too. Nevertheless, the pricing structure in most cases leads to higher costs.

Is It Always An Expensive Option?

A flat rate is not always expensive. But it often sits at the higher end. Why is it so? The merchant service provider set them higher to account for high percentages that may creep in through interchange rates. Hence, merchants usually pay more than what is required.

Flat Rate Pros

  • You pay the same amount for every transaction.
  • You can anticipate monthly processing fees, hence costs are predictable.
  • Most models don’t charge fixed monthly account fees.
  • It is easy to understand and monitor.

Flat Rate Cons

  • They are generally more expensive on per sale transaction basis.
  • They are expensive for high transaction volumes.
  • Due to bundled pricing, the flat rate is usually priced at a more expensive end.

Hence, flat-rate credit card processing is the least expensive option for seasonal or small merchants only. They charge businesses per transaction and not on a fixed monthly fee basis. The transactions for such businesses are always on the lower side.

Flat Rate Pricing Alternatives

The options to flat rate are many. It depends upon what suits your business. Still, the following options are most common.

Membership or subscription pricing

In this option, the credit card processor applies his markup margin as a fixed monthly fee plus a per-transaction fee. Unlike flat-rate credit card processing, It does not take a percentage of your sales.

Such processors make money from subscription amounts charged to merchants. They don’t take a cut of your sales. The merchant pays the flat monthly or annual fee along with interchange fees. Hence, it is an honest system where there is full transparency on fees charged by the processor.

Interchange Plus

This pricing system bifurcates the amount charged by the credit card associations and the issuing bank. It means that you can find out the value of fees charged by your credit card processor.

You can quickly find out if you are getting the best rates or not. You can also figure out if you are with the best credit card processor. In any case, there is a higher level of transparency.

On the flip side, the interchange plus system comes with complex statements that are difficult to read. However, it is better to see complex statements than to pay unnecessary fees.

Tiered Pricing

Here, the credit card processor can group different interchange fees into three or more tiers. It makes things simple and the statements are easier to read, similar to a flat rate system.

Still, it is always a more expensive alternative. Moreover, such companies implement unethical business practices. It is better to avoid tiered pricing and stay away from such less-than-ethical processors.

Square: The biggest option

Square payments are another smart option to accept payments securely and quickly in a user-friendly way. There are no long-term contracts or extra fees. You can depend on just payment processing in-person, online, remote, or manually-entered, and more.


Flat rate credit card processing fees come with several benefits, playing positive roles in the processing industry. But, seasonal and small businesses need to know that it may cost them more than what is justified. Such businesses have only a few transactions every month and flat-rate credit card processing may increase costs unnecessarily.

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