If you're on Square, Stripe, or any flat-rate processor, you're paying the same percentage on every transaction — no matter what. A debit card swipe costs you the same as a premium Amex card. Sounds simple, right?
Simple, yes. Cheap? Not so much.
How Flat Rate Works
Square charges 2.6% + 10¢ per swipe. Stripe charges 2.9% + 30¢ online. That rate never changes whether your customer uses a basic Visa debit card (which actually costs ~0.8% in interchange) or a fancy rewards card (~2.3%).
So on that debit card transaction, you're paying 2.6% when the real cost is 0.8%. That's a 1.8% premium you're handing to Square for “simplicity.”
How Interchange-Plus Works
With interchange-plus, you pay the actual interchange rate (set by Visa/Mastercard — every processor pays this) plus a small fixed markup. So that debit card costs 0.8% + the markup. The rewards card costs 2.3% + the markup.
The math is straightforward: on low-cost cards, you save a ton. On expensive cards, it's about the same. Overall, most businesses save 15–30% on processing costs.
Who Wins? Let's Run the Numbers
Say you're a restaurant in DC doing $50,000/month with about 1,500 transactions:
Square: $50,000 × 2.6% + 1,500 × $0.10 = $1,450/month
Interchange-plus: Assuming 1.8% average interchange + modest markup + per-transaction fee ≈ $1,100/month
That's $350/month — or $4,200/year — back in your pocket. And the higher your volume, the bigger the gap.
So Why Does Anyone Use Flat Rate?
Honestly? Convenience. Square is dead simple to set up and there's no application process. For a brand-new business doing $5,000/month, the simplicity might be worth the premium.
But once you're processing $20,000+ per month, flat rate is costing you real money. That's the point where switching to interchange-plus — like what we offer at PAYHERO — starts making serious financial sense.
Curious where you fall? Our Fair Rate Analyzer can show you in 60 seconds.