If you’ve ever signed up with a payment processor, you’ve probably heard the pitch: “Don’t worry about complicated fees — just one simple flat rate for every transaction.”
At first glance, it sounds perfect. No confusing tables, no fine print, no stress. Just swipe the card, pay the same percentage, and move on. That simplicity is why flat rate pricing has exploded in popularity, especially among small business owners who don’t have time to analyze every line item on a statement.
But here’s the catch: simple doesn’t always mean cheapest.
Flat rate pricing is easy to understand — but it can also be one of the most expensive ways to process credit card payments.
Here’s why.
Every credit card transaction has a baseline cost called interchange. This is set by the card networks (Visa, Mastercard, AmEx, Discover) and paid to the bank that issued the customer’s card. Interchange varies by transaction type: debit cards are cheaper than rewards cards, in-person swipes are cheaper than online transactions, etc.
When a processor offers flat rate pricing, they’re averaging all those different interchange rates together — and then adding their own margin on top. That means when you process a low-cost debit card, you’re still paying the higher flat rate. The difference? That goes straight into the processor’s pocket.
For example, let’s say interchange on a debit card transaction is 0.8%. Under a flat rate model, you might still pay 2.9% + 30¢. That’s a massive difference on every transaction — and over time, those pennies per swipe add up to real money.
The flip side is true too: if you’re mostly processing higher-cost transactions (like rewards credit cards or online orders), flat rate may feel closer to “fair.” But in most cases, especially for brick-and-mortar businesses with a lot of debit transactions, flat rate means overpaying.
So why do processors push it so hard? Because simplicity sells. Most business owners don’t want to wade through pages of interchange tables, so the promise of “one easy rate” is attractive. And processors know the extra margin they collect on low-cost transactions makes flat rate a very profitable model — for them.
This doesn’t mean flat rate is always bad. For very small businesses with low volume, the predictability may outweigh the potential savings. But for anyone processing significant revenue — think $10K, $20K, or more a month — the difference between flat rate and interchange-plus pricing can easily reach thousands of dollars a year.
The key takeaway: if you’re on flat rate pricing, it’s worth asking some questions. How much of your volume is debit versus credit? Are you processing in-person or mostly online? What would your fees look like under an interchange-plus model?
Because while simplicity is nice, it shouldn’t come at the expense of your margins.
At Paygent.ai, our mission is to help you see beyond the marketing and into the reality of what you’re paying. We believe small business owners deserve transparency — not “easy” pricing that quietly costs them more.
Flat rate may look like a shortcut. But in the long run, clarity always wins.