Flat-rate fees vs interchange-plus pricing, explained
Every card payment provider prices itself one of two ways. Understanding the difference is the single most useful thing you can learn before choosing (or switching) a payment provider.
Flat-rate pricing
One blended % on every transaction, regardless of card type or how it was presented. The provider absorbs the difference between cheap debit interchange and pricier credit/rewards-card interchange, and averages it into a single number.
2026 UK examples: SumUp 1.69%, Zettle 1.75%, Square 1.75%.
Pros: Simple, predictable, usually no monthly fee, no statement to decode.
Cons: You overpay on debit-heavy sales to subsidise the blended average; the rate doesn't fall as volume grows.
Interchange-plus pricing
Three separate, itemised components: the regulated interchange fee (paid to the card issuer), a scheme fee (paid to Visa/Mastercard, small but uncapped), and a processor markup — the only genuinely negotiable part.
Typical effective cost: industry sources cite roughly 0.4%–1% for debit-heavy merchants — well below flat-rate, but only the markup is negotiable and statements are harder to read.
Pros: Transparent, can be materially cheaper at volume.
Cons: More complex statements, usually requires a sales conversation rather than a published rate.
The actual UK interchange fee caps
Quoting the Payment Systems Regulator directly: the UK Interchange Fee Regulation "currently limit[s] interchange fees to 0.2% of the value of a transaction for consumer debit cards (including prepaid cards), and 0.3% for consumer credit cards," where the merchant, acquirer and card issuer are all UK-based.
What's NOT covered by the cap
Commercial/business cards aren't covered — industry sources put typical commercial card interchange at roughly 1.65%–1.90%, several times higher than the capped consumer rate.
Cross-border is a live issue
Since Brexit, UK–EEA card-not-present interchange lost cap protection — Visa/Mastercard raised it to 1.15% (debit) and 1.5% (credit). The PSR's own market review estimated this costs UK merchants and consumers £150–200 million a year, and a long-term cap remedy is still under regulatory consultation as of late 2025.
Interchange cap figures verified directly from psr.org.uk on 30 July 2026. Commercial card interchange range and cross-border cost estimate are industry-sourced; the cross-border remedy is an evolving regulatory matter — check the PSR's site for the latest status.
Which suits your business?
Flat-rate suits you if: your volume is low, seasonal, or unpredictable, and simplicity matters more than shaving off a fraction of a percent. Interchange-plus is worth exploring if: you process a steady £10,000+/month, especially with a debit-heavy customer base — get a quote and compare it directly against your current flat-rate cost. See our £10,000/month comparison for worked numbers.
Frequently asked questions
What is flat-rate pricing?
A single blended % on every transaction. SumUp (1.69%), Zettle (1.75%) and Square (1.75%) all use this model in the UK.
What is interchange-plus pricing?
A pass-through model: the regulated interchange fee, plus a scheme fee, plus a separate negotiable processor markup — rather than one blended number.
What's the UK interchange cap?
0.2% for consumer debit cards, 0.3% for consumer credit cards, enforced by the Payment Systems Regulator. Commercial/business cards aren't covered by this cap.
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Sources: UK interchange caps and cross-border cost estimate verified directly from the Payment Systems Regulator (psr.org.uk), 30 July 2026. Provider flat-rate figures checked directly against sumup.com, zettle.com and squareup.com/gb. Interchange-plus effective cost range and commercial card interchange range are industry-sourced estimates, not government-verified figures — treated as indicative in this article. See our Editorial Policy.