Flat-Rate Processing
What flat-rate processing is
Flat-rate processing is a pricing model where you pay the same percentage (and often a fixed pence amount) on every card transaction, regardless of the card type used. Square charges 1.75% in the UK for in-person payments. Stripe charges 1.5% + 20p for standard UK cards.
The rate does not change whether the customer uses:
- A basic Visa debit card
- A premium Visa Signature rewards credit card
- A corporate Mastercard
- A foreign-issued card
Why flat-rate is appealing
Predictability. You know exactly what each transaction will cost. There are no monthly minimums, no separate interchange schedules, no card-type billing surprises. For a business processing under £5,000/month in cards, this simplicity is worth the slightly higher cost.
Why flat-rate becomes expensive at volume
Flat-rate processors bundle the interchange cost, assessment, and their own margin into a single rate. At low volume (under £5K/mo), the bundling is fair — you’re getting predictability and the processing infrastructure for a reasonable price.
At high volume (above £15K/mo), the merchant’s transaction mix matters. If 60% of your transactions are basic UK debit cards (interchange ~0.2%–0.3%), you’re paying Square 1.75% on cards that cost Square ~0.35% to process — a 1.4-point markup instead of the ~0.3-point markup a direct processor relationship would charge.
The annual impact at £20,000/month card volume with a 60% debit mix:
- Flat-rate at 1.75%: £4,200/yr
- Interchange-plus at ~1.3% effective: £3,120/yr
- Annual savings from switching: £1,080/yr
Who should stay on flat-rate
- Under £10,000/month card volume (savings from switching don’t justify the admin overhead)
- Mobile traders and market stalls (no processor relationship available at this scale)
- Businesses that value simplicity over optimisation
Who should evaluate interchange-plus
- Any business above £15,000/month card volume
- Businesses using a POS with an open payment API (Lightspeed)
- Multi-location chains (even a 0.3% rate improvement across 5 locations saves £18,000+/yr at £20K/location/mo)