Interchange-plus bills you the actual interchange and assessments for each sale, plus a published markup. Tiered pricing groups those same wholesale costs into a few buckets, usually qualified, mid-qualified, and non-qualified, and quotes the cheapest bucket as the rate. The qualified number is a teaser. Your invoice is the blend of every bucket you landed in, plus per-item and monthly extras. Do not compare a 1.75 percent qualified rate to an interchange-plus markup of 0.20 percent plus $0.10. They are not the same object. Ask which model your statement actually is, then compare effective rate: total processing fees divided by gross card volume for the same period.
These two models are two of six common pricing structures. Neither is automatically cheaper. They change what you can see.
The floor is the same
Every card sale has three layers. Interchange is set by the card networks and paid to the bank that issued the card. Assessments are the networks' own dues. Markup is everything your processor and sales organization add on top. Typical processing fees are often described as 1.5 percent to 3.5 percent of the transaction plus a per-item fee (U.S. Chamber of Commerce, 4 Jun 2026). Treat that as a range check, not a quote and not a Relyon rate.
No one in the sales chain can discount interchange. For debit issued by banks with $10 billion or more in assets, Regulation II caps interchange at 21 cents plus 5 basis points of the transaction, plus up to 1 cent if fraud-prevention standards are met. Issuers under $10 billion are exempt (Federal Reserve, Regulation II small-entity compliance guide, last update 23 Jun 2023). That cheap debit floor is why mix matters, and why a model that blends debit into a rewards-priced bucket can look simple and still cost more.
How interchange-plus bills
Interchange-plus (IC+) is cost plus a disclosed plus. The statement lists interchange categories, a separate assessments block, and one markup: a percentage of volume and usually a per-item fee, for example 0.20 percent plus $0.10 (illustrative). The wholesale lines move with card type, capture method, and merchant category. The plus does not, unless you signed a new schedule.
What you get:
- A debit card and a rewards card show different wholesale costs and the same markup.
- You can audit the plus line by line.
- Two months with different customers will not match, even if the markup is frozen. That is mix, not a silent rate hike.
What you give up:
- A longer statement.
- A bill that moves when mix moves.
IC+ is inspectable. It is not a coupon. If the plus is fat, or monthly extras pile up, effective rate can still sit at the high end of the typical range.
How tiered bills
Tiered pricing maps hundreds of interchange categories onto a handful of buckets. The common shape is three: qualified, mid-qualified, and non-qualified. The rate on the quote sheet is almost always qualified, the floor.
The provider writes the mapping. A basic card-present debit sale might land qualified. A rewards credit card, a keyed sale, a business card, or a missing data field often downgrades. Downgrade is not a network word. It is the processor moving your sale into a more expensive bucket. Two providers can quote the same 1.75 percent qualified rate and put different cards in non-qualified.
What you get:
- A short statement with two or three rates instead of a page of interchange codes.
- A number that is easy to say in a sales conversation.
What you give up:
- Visibility into wholesale cost.
- Control over which sales pay the teaser. The advertised rate is not a promise about mix.
If most of last month's volume is mid-qualified or non-qualified, the qualified rate was never yours.
Same month, two models (illustrative)
Hold volume constant. These figures are illustrative, not a quote.
Merchant: $80,000 card volume, 800 settled transactions.
Interchange-plus at 0.20 percent plus $0.10, with $40 of monthly extras:
| Line | Amount |
|---|---|
| Interchange | $1,280 |
| Assessments | $104 |
| Markup (0.20% of $80,000) | $160 |
| Per-item (800 x $0.10) | $80 |
| Monthly extras | $40 |
| Total fees | $1,664 |
| Effective rate | 2.08% |
Tiered quoted at 1.75 percent qualified, with 40 percent of volume qualified, 35 percent mid-qualified at 2.50 percent, 25 percent non-qualified at 3.50 percent, same per-item and extras:
| Line | Amount |
|---|---|
| Qualified ($32,000 at 1.75%) | $560 |
| Mid-qualified ($28,000 at 2.50%) | $700 |
| Non-qualified ($20,000 at 3.50%) | $700 |
| Per-item (800 x $0.10) | $80 |
| Monthly extras | $40 |
| Total fees | $2,080 |
| Effective rate | 2.60% |
- Wholesale (interchange + assessments) $1,384
- Markup 0.20% + $0.10 = $240, plus $40 extras
- Total fees $1,664 (effective rate 2.08%)
- Quoted qualified rate 1.75%
- 40% qualified, 35% mid, 25% non-qualified
- Total fees $2,080 (effective rate 2.60%)
The qualified rate (1.75 percent) looks cheaper than the IC+ plus (0.20 percent plus $0.10) if you compare those two numbers. That comparison is the sales trick. On this mix the tiered month costs $416 more, 52 basis points of effective rate. Change the mix toward more qualified debit and the gap shrinks. Change it toward rewards and keyed volume and the gap widens. The teaser does not move. Your blend does.
A different plus, or a tighter tier map, can flip the ranking. That is the point: rebuild the same month. Do not shop headline rates.
How to tell which statement you have
Ignore the proposal. Read last month.
You are on interchange-plus if you can find:
- Interchange listed by category or card product, with amounts that move with mix.
- Assessments (and similar network dues) on their own lines.
- One markup: a percent, a per-item, or both, named as discount, plus, or processor fee.
You are on tiered if you see qualified, mid-qualified, and non-qualified (or two of those), and you cannot match interchange categories to a published network schedule. Some statements say "interchange" in the header and still bucket. Count the rate columns. Three named buckets is tiered even if the deck said cost-plus.
A hybrid exists: a bundled or flat rate that is neither. One percentage on every card, no buckets and no interchange detail, is a different model. Do not force it into this comparison.
Then compute effective rate on that same statement. Add every processing line, including PCI, batch, statement, and gateway. Divide by gross card sales, not net deposits. If the number is far above the qualified rate, the teaser did its job.
When each model is the rational pick
Neither wins in the abstract.
Interchange-plus fits when volume is steady, you will actually read a statement, and mix includes a real share of debit or basic credit that should not pay rewards prices. Card-present retail with a debit-heavy book is the usual case. B2B shops that already send extra commercial-card data also want the cheaper interchange category to show up as interchange, not disappear into non-qualified.
Tiered can fit when the statement itself is the product you want: short, a handful of rates, little reconciling. Very small volume, where a 50-basis-point gap is smaller than the time to audit IC+, is a fair trade if you know you are making it. It is a poor trade if you chose it because the qualified rate was the only number on the quote.
Questions that decide, in writing:
- What share of last month's volume would qualify under your tier rules?
- What cards and capture methods downgrade, by name?
- Is the IC+ plus the only processor percentage, or are there extra "network" lines that are not on any network schedule?
- What is effective rate on this statement under each model?
If a provider will not rebuild last month both ways, you do not have a comparison. You have two slogans.
What to do with a new quote
- Pull one full statement. Add every processing line. Divide by card volume. That is today's effective rate.
- Identify the current model with the tests above.
- Demand the other model's math on the same month: IC+ as interchange at cost, assessments at cost, markup stated; tiered as three rates plus the downgrade rules.
- Include monthly extras on both sides. A cheaper plus with a new $30 PCI program is not cheaper.
- Sign only if effective rate falls, or if you are paying for simplicity on purpose and can say so.
If you would rather not rebuild the buckets by hand, run last month's statement. As-billed first. Then only the models the statement actually supports. It will not crown a winner. Your mix does that.
FAQ
What is the difference between interchange-plus and tiered pricing? Interchange-plus passes interchange and assessments at cost and adds a published markup. Tiered pricing groups those wholesale categories into qualified, mid-qualified, and non-qualified buckets the provider defines. The advertised number on tiered is usually the qualified floor, not what you pay.
Is interchange-plus cheaper than tiered pricing? Not always. IC+ is more inspectable. Debit-heavy, card-present volume often bills less on IC+ because cheap wholesale debit is not blended into a higher bucket. A short tiered statement can still be the right trade if you accept the teaser and measure effective rate every month.
What do qualified, mid-qualified, and non-qualified rates mean? They are processor buckets, not network categories. Qualified is the cheapest advertised rate. Rewards, business, keyed, and some debit cards are often downgraded to mid-qualified or non-qualified. The provider writes the mapping. Two processors can quote the same qualified rate and bill different months.
How do I know if I am on interchange-plus or tiered? Read the statement, not the sales deck. IC+ lists interchange categories, a separate assessments block, and one markup line such as 0.20 percent plus $0.10. Tiered shows two or three named buckets. If you cannot find interchange at cost, you are not on interchange-plus, even if the quote used the word interchange.
Why is my effective rate higher than my qualified rate? Because only a slice of volume actually qualified. Mid-qualified and non-qualified volume, per-item fees, and monthly extras all sit above the teaser. Effective rate is total fees divided by card volume for the same period. That is the comparison number.
Should I switch from tiered to interchange-plus? Switch only if effective rate falls on your mix, and if you will actually read an itemized statement. Rebuild last month under both models before you sign. A lower qualified rate is not a lower bill.
Sources
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