Interchange-plus (IC+) pricing is a card-acceptance model where you pay the wholesale cost of each transaction at cost, plus a separate, fixed markup that is disclosed up front. The wholesale cost has two parts set by the networks, not your provider: interchange (paid to the card-issuing bank) and assessments (paid to Visa, Mastercard, and the other networks). Your provider's only earnings are the stated markup.
How it works
The pricing reduces to one formula:
| Component | Who sets it | Who keeps it |
|---|---|---|
| Interchange | Card networks | Issuing bank |
| Assessments | Card networks | Card network |
| Fixed markup (the "plus") | Your provider | Your provider |
So your effective rate per transaction is interchange + assessments + fixed markup. The first two pass through at cost and move with the card type a customer presents; only the markup stays constant. A statement quotes the markup as a small percentage plus a per-item fee, for example 0.25% + $0.10.
This is the key contrast with tiered pricing, which buckets every transaction into "qualified," "mid-qualified," or "non-qualified" rates. Tiered pricing hides interchange inside each bucket and lets the provider decide which bucket a card lands in, so the same card can be priced differently month to month. IC+ removes that discretion: because interchange and assessments are itemized at cost, you can see exactly what the networks charged and exactly what your provider earned. That line-by-line visibility is why IC+ is widely considered the most transparent of the common models.
A worked month
Take $50,000 of volume and 1,000 transactions. These figures are illustrative and labeled as such.
| Layer | How it is billed | This month |
|---|---|---|
| Interchange | Network schedule, varies by card | $1,050 |
| Assessments | Network percentage + per-item | $75 |
| Markup (the plus) | 0.25% + $0.10 | $125 + $100 = $225 |
| Total fees | $1,350 | |
| Effective rate | $1,350 ÷ $50,000 | 2.70% |
Change the markup to 0.10% + $0.08 and the same interchange still costs $1,125 in network fees, but total fees drop. That is the only lever a provider actually owns. Change the card mix toward more rewards cards and interchange rises even if the markup is frozen. IC+ makes both movements visible. A tiered statement would have shown one "non-qualified" rate and you would not know which movement it was.
Why it matters to you
IC+ suits merchants and agents who want an audit trail behind every basis point and a markup that does not drift. It is especially clear for businesses with a varied card mix, where pass-through pricing reflects real cost instead of averaging it into opaque tiers. The trade-off is that your total rate moves with interchange, so two months can differ even when the markup is identical.
IC+ is one of six pricing models Relyon presents, alongside tiered, flat, surcharge, dual pricing, and IC optimization. We do not treat any model as the default. The right choice depends on your card mix, ticket size, and margin goals. See all six compared, then run your statement if you want the markup isolated on your actual volume.
How to read IC+ on a statement
A real IC+ statement lists interchange categories (often by card brand and product), a separate assessments block, and one markup line such as "0.20% + $0.10." If you cannot find those three, you are not looking at IC+. You may be on tiered or a blend that borrowed the name. Count the markup lines. One disclosed plus is IC+. Three buckets named qualified, mid, and non-qualified is tiered, even if the sales deck said "interchange."
Add the three blocks, divide by volume, and you have the effective rate for that month. Repeat next month. The markup should not move unless you signed a new schedule. Interchange will move with mix.
Interchange-plus versus a flat rate
A flat rate is one blended percentage for every card. It is easy to quote and hard to audit. IC+ itemizes the three layers, so a debit card and a rewards card show different wholesale costs and the same markup. Neither model is automatically cheaper. Debit-heavy card-present volume often looks better on IC+. Rewards-heavy or tiny-ticket volume can look better on a well-priced flat rate. The only honest comparison is effective rate on the same month of volume.
Are interchange fees negotiable?
The interchange schedule itself is not. Visa, Mastercard, Discover, and American Express publish those rates and update them on a regular cycle. Your provider cannot discount interchange, and neither can you. What is negotiable is the plus: the markup percentage and the per-item fee. If a quote promises to "lower interchange," they are renaming markup. Ask for the IC+ equivalent in writing: interchange at cost, assessments at cost, markup stated separately.
Why interchange fees are high, and who keeps them
Interchange funds the card-issuing bank: rewards, fraud, and the float of paying the merchant before the cardholder pays the issuer. That is why a rewards card costs more than a basic debit card, and why card-not-present costs more than a chip dip. The issuing bank keeps interchange. The network keeps assessments. Your provider keeps only the disclosed markup under IC+.
Banks do make money on interchange. That is the design of the four-party model. Merchants do not "benefit" from interchange as a line item. They benefit from the card being accepted. IC+ does not remove interchange. It stops the provider from hiding a second margin inside a qualified/mid/non-qualified bucket.
Frequently asked questions
Are interchange fees negotiable? The network rates are not. The provider markup on top of them is. That split is the whole point of IC+.
Do banks make money on interchange fees? Yes. Interchange is the issuing bank's fee. Assessments are the network's fee. Under IC+ those two pass through at cost.
Who benefits from interchange fees? Issuers, and cardholders who receive rewards funded by those fees. Merchants pay them as a cost of acceptance. IC+ does not change who keeps interchange. It changes whether you can see it.
Why are interchange fees so high? They vary by card product, how the card is run, and merchant category. Rewards, keyed entry, and card-not-present sit higher. The published schedules are public. A high bill is often mix plus markup, not a secret interchange hike. Itemize both.
Is IC+ always the cheapest model? No. It is the most inspectable. Cheapest depends on mix and ticket size. Compute effective rate on your statement before you pick a model.
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