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Card processing is sold in two pricing models, blended and interchange plus, and the one you are on quietly decides how much of your fee you can actually see and how much you pay. Most small businesses are placed on blended by default, yet interchange plus is often cheaper once volume grows. This guide compares the two so you can tell which is right for your business.
In short. Blended charges one flat rate on every card, simple but opaque, and it can overcharge you on cheap debit cards. Interchange plus passes the wholesale cost through at cost with a clearly separate margin on top, more transparent and usually cheaper at volume. The right model depends on your card mix, your volume, and how much visibility you want.
Every card fee is built from three parts. Interchange goes to the customer bank and is capped by UK law at 0.2 percent for consumer debit and 0.3 percent for consumer credit on domestic transactions. Scheme fees go to Visa or Mastercard for running the network, and are small and fixed. The third part is your provider margin, the only piece that genuinely varies between providers. The pricing model simply decides how those three are packaged on your bill.
Blended rolls all three parts into a single rate applied to every transaction, whatever card the customer uses. A cafe charged a flat 1.6 percent pays that on a cheap debit card and on a premium rewards card alike.
The upside. It is simple and predictable. One rate, easy to forecast and easy to read on a statement.
The downside. It hides your margin and averages across card types. Because most everyday spending is on debit cards that carry very low capped interchange, a flat rate can leave you paying well above cost on those transactions while the provider keeps the difference.
Interchange plus separates the fee. The interchange and scheme fees are passed straight through at cost, and your provider adds a clearly stated fixed margin on top, for example interchange plus 0.3 percent plus a few pence per transaction.
The upside. Transparency. You can see exactly what is wholesale cost and what is provider margin, and you benefit directly from the capped interchange on debit cards rather than a rounded up flat fee. At volume this usually works out cheaper.
The downside. The statement is more detailed and the total varies slightly month to month with your card mix, which some owners find harder to forecast.
✓ Interchange plus tends to win when you take a high share of standard consumer debit cards, where capped interchange is lowest.
✓ It tends to win when your monthly card volume is substantial, so the transparent margin beats an averaged flat rate.
✓ It suits you if you want to see and challenge exactly what you pay.
✗ Blended can suit a low volume business where simplicity matters more than the last fraction of a percent.
✗ Watch a blended rate if you take many premium or business cards, as the flat rate may be quietly high to cover them.
Say you take 30,000 pounds a month, mostly on consumer debit. On a blended 1.6 percent you pay 480 pounds. On interchange plus, the debit interchange is capped at 0.2 percent, scheme fees are small, and your provider margin might be 0.3 percent plus 2 pence a transaction. Across a debit heavy month that can land meaningfully below the blended figure, because you are paying the true low cost of those debit cards rather than an averaged rate built to also cover expensive cards. The more debit heavy and higher volume you are, the wider that gap tends to be. On a low volume account taking a lot of premium cards, the two can end up closer, which is why the answer depends on your mix rather than a rule of thumb. It is worth running this test at least once a year, because your card mix and monthly volume drift over time and the cheaper model can quietly flip from one to the other.
Do not compare the two on the headline number alone. The only fair test is your effective rate, total fees divided by total takings across a real month, worked out under each model on your actual card mix. That single figure tells you which is genuinely cheaper for your business.
1. Work out your effective rate. Take a recent statement and divide total fees by total card takings. That is your true current cost.
2. Ask providers to quote both ways. On your real volume and card mix, not a headline example.
3. Check the extras. Monthly minimums, terminal rental, authorisation and PCI fees can move the total more than the pricing model does.
4. Compare on total cost. Choose on the full monthly cost across a real month, then diarise a review in a year as your volume changes.
Not always, but usually at volume and on debit heavy takings. On a small, premium card heavy account the two can be close, so compare on your real mix.
Because blended averages all card types into one rate. It is simple, but it can mean overpaying on cheap debit cards to subsidise more expensive ones.
No. Interchange is capped by law and identical across providers. Anyone claiming to cut it is really cutting their own margin, which is the only part that varies.
Interchange plus, because it shows the wholesale cost and the provider margin separately. Blended hides the margin inside one flat rate.
Check your statement. One flat percentage on every transaction is blended. A pass through cost plus a separate stated margin is interchange plus. Ask your provider if it is not clear.