Interchange-Plus Pricing
What interchange-plus pricing is
Interchange-plus (also called cost-plus or pass-through pricing) is a payment processing pricing model where:
- You pay the exact interchange rate on each transaction (set by Visa/Mastercard, varies by card type)
- Plus a fixed processor markup (e.g., 0.3% + 5p)
The total varies transaction by transaction based on the actual card used. A contactless debit tap is cheapest (interchange ~0.2% for many UK debit cards). A premium rewards credit card is most expensive (interchange ~1.8%).
Interchange-plus vs flat-rate
| Model | How it works | Who benefits |
|---|---|---|
| Flat-rate (Square 1.75%) | Fixed percentage regardless of card type | Predictable; good for low volume or high rewards card mix |
| Interchange-plus (0.3% + 5p over cost) | Actual interchange + fixed markup | Better for high volume, debit-heavy transaction mix |
At £20,000/month card volume with a typical UK debit-heavy mix (60% debit, 40% credit), interchange-plus at 0.3% + 5p over cost typically lands around 1.3%–1.5% effective — materially below Square’s 1.75% flat rate.
Who can access interchange-plus
Not all processors offer interchange-plus. In the UK, accessing it typically requires:
- A direct acquirer relationship (not a third-party aggregator like Square or PayPal)
- Volume above £10,000–£15,000/month (below this, processors often won’t offer it)
- A POS that supports an open payment API — Lightspeed does; Square and Toast do not without significant integration work
The Lightspeed advantage
Lightspeed Retail and Lightspeed Restaurant both support third-party payment processors via their open API with no surcharge. This means a Lightspeed operator at £15,000+/month card volume can negotiate directly with a UK acquirer (e.g., Worldpay, Barclaycard, Cardnet, Lloyds Cardnet) for interchange-plus pricing, then plug that processor into Lightspeed.
The practical saving at £20,000/month: switching from Square’s 1.75% flat rate to a negotiated 1.4% interchange-plus saves £840/year. The Lightspeed software premium over Square is £1,788/yr. At £20K/mo, the processor saving partially offsets the software cost; above £35K/mo card volume, it more than offsets it.
Related pages
- Interchange fee explained — the wholesale cost that forms the “interchange” in interchange-plus
- How to negotiate your processing rate — practical guide to getting an interchange-plus quote
- Lightspeed Retail review — the POS that makes third-party processor switching practical