If you’ve ever squinted at your merchant statement wondering why your processing costs seem higher than expected, you’re not alone. The world of payment processing can feel deliberately opaque, but understanding how you’re being charged is one of the most straightforward ways to protect your margins.
For B2B merchants especially—those juggling over-the-phone transactions, invoice orders, keyed-in payments, and corporate purchasing cards—the pricing model you choose can mean the difference between competitive processing costs and leaving thousands of dollars on the table each year.
This guide breaks down the two most common pricing structures: tiered pricing and interchange-plus pricing. We’ll help you understand which model you’re likely on right now, why it matters more than you might think, and how to choose the right fit for your business.
What actually determines your processing costs?
Before we compare pricing models, let’s establish what drives the fees you pay on every transaction. Your total cost per transaction includes three main components:
Interchange fees
Set by the card networks (Visa, Mastercard, Discover, American Express) and the banks that issue the cards. Think of these as the wholesale cost of accepting card payments. These rates vary based on dozens of factors: whether it’s a consumer or business card, a rewards card or basic card, swiped in person or entered manually, processed immediately or in a delayed batch.
Network assessment fees
Charged by the card networks themselves for using their infrastructure. These are relatively small but unavoidable.
Processor markup
What your payment processor adds on top. This is where your choice of pricing model makes the biggest difference. This markup covers the processor’s services, technology, support, and profit margin.
Your effective rate—what you actually pay—is the sum of all three components. The pricing model you choose determines how transparent these components are and how much control you have over them.
Tiered pricing: the “bucket” approach
How it works
Tiered pricing, sometimes called bundled or qualified pricing, simplifies the hundreds of possible interchange rates into just a few categories—typically three buckets labeled “qualified,” “mid-qualified,” and “non-qualified.”
Your processor might quote you rates like: 1.79% for qualified transactions, 2.70% for mid-qualified, and 3.49% for non-qualified. Sounds straightforward, right?
Here’s the catch: your processor decides which transactions fall into which bucket. A standard consumer credit card swiped in person might hit the qualified rate. But key in that same card number manually? It could jump to mid-qualified. Accept a rewards card, a corporate card, or a card issued outside the U.S.? That might land in non-qualified territory.
The appeal
For a small retail business with simple, predictable transactions—mostly consumer cards swiped in person during regular business hours—tiered pricing offers genuine simplicity. You know your three rates, and most of your transactions hit the lowest one. Your monthly statement is easy to understand, and budgeting is straightforward.
The hidden costs
The problem emerges when your transaction mix becomes more varied, which is almost inevitable for growing B2B businesses. Consider these common scenarios:
- ▸You take a phone order and key in the card number instead of swiping it. That transaction just moved from qualified to mid-qualified, and you’re paying nearly a full percentage point more—even though it’s the same card and the same customer.
- ▸A client pays with their corporate rewards card. Now you’re in non-qualified territory, paying your highest rate even though the transaction was perfectly routine.
- ▸Your platform processes an invoice order that was paid virtually. Depending on how your processor categorizes online transactions, this could easily hit the mid or non-qualified tier.
The fundamental issue with tiered pricing: You’re trusting your processor to define the buckets fairly. Many processors use tiered pricing specifically because it allows them to maximize revenue by categorizing more transactions into higher tiers. You have limited visibility into these decisions and little leverage to negotiate.
For B2B merchants who naturally handle more complex transaction types—larger orders, business cards, corporate purchasing cards, international clients—tiered pricing almost always means paying more than necessary.
Interchange-plus pricing: the transparent approach
How it works
Interchange-plus pricing takes a fundamentally different approach. Instead of bundling costs into tiers, your processor charges you the actual interchange fee for each transaction, then adds a clearly stated markup on top.
For example, your pricing might be “interchange + 0.30% + $0.10 per transaction.” That markup remains consistent across all your transactions.
The interchange fee varies based on the card type and how it’s processed, but you see exactly what it is.
Example scenarios:
Scenario 1: Customer pays with a standard Visa credit card swiped in person
Interchange fee: 1.51% + $0.10 (set by Visa)
Processor markup: 0.30% + $0.10
Total cost: 1.81% + $0.20
Scenario 2: Customer pays with a premium rewards card online
Interchange fee: 2.30% + $0.10 (set by Visa)
Processor markup: 0.30% + $0.10 (same as above)
Total cost: 2.60% + $0.20
The advantages
Complete transparency
Your monthly statement breaks down the actual interchange cost versus your processor’s markup. You can see exactly what you’re paying and why. This makes it straightforward to compare processors and negotiate better terms.
Cost alignment with transaction type
You pay more for genuinely higher-cost transactions (like premium rewards cards) and less for lower-cost ones (like basic consumer cards). There’s no arbitrary bucketing that might work against you.
Better for varied transaction types
B2B merchants typically accept a wide mix of payment types: corporate cards, purchasing cards, keyed-in phone orders, e-commerce transactions, international cards. Under interchange-plus, each transaction is priced fairly based on its actual cost, rather than potentially being dumped into a higher tier.
Scalability
As your business grows and your transaction types diversify, interchange-plus pricing adapts naturally. You’re not stuck with a tiered model that worked when you were small but penalizes you as you expand into new channels.
Negotiation leverage
Since the processor’s markup is transparent and consistent, you can easily compare offers from different processors. A quote of “interchange + 0.20% + $0.08” is clearly better than “interchange + 0.35% + $0.15,” and you have a solid basis for negotiation as your volume grows.
The trade-offs
Interchange-plus pricing does require more attention. Your effective rate will vary from month to month based on your transaction mix. If you process more premium cards in one month, your costs will be higher. If you have a month heavy with basic consumer cards, costs will be lower.
For some business owners, this variability feels less predictable than tiered pricing. However, this is actually true cost transparency—you’re seeing the real costs of your transaction mix rather than having them masked by arbitrary tiers. The additional complexity is manageable, especially given that most modern merchant statements clearly break down interchange versus processor markup. The trade-off is worthwhile for the control and potential savings you gain.
Side-by-side comparison
| Factor | Tiered Pricing | Interchange-Plus Pricing |
|---|---|---|
| Cost transparency | Low—you see bucket rates but not the underlying costs | High—you see actual interchange fees plus processor markup |
| Ease of understanding | High initially—just a few rates to remember | Moderate—requires understanding that rates vary by transaction |
| Cost predictability | Moderate to high if your mix stays constant | Lower—costs fluctuate with your actual transaction mix |
| Best fit | Very small businesses with extremely simple, consistent transaction types | Growing businesses, B2B companies, multi-channel merchants |
| Potential cost effectiveness | Often higher costs due to transactions landing in mid/non-qualified tiers | Generally lower costs, especially with varied transaction types |
| Negotiation power | Limited—hard to compare processors or understand true costs | Strong—clear markup makes comparison and negotiation straightforward |
| Adaptability | Poor—pricing structure may penalize business growth or channel expansion | Excellent—scales naturally as your business evolves |
Why this matters more for B2B merchants
B2B transactions have characteristics that make pricing model choice particularly important:
Higher average ticket sizes
Even small differences in percentage rates translate to significant dollar amounts. A 0.5% difference on a $5,000 transaction is $25—multiply that across hundreds of transactions and you’re looking at thousands of dollars in annual processing costs.
More business and corporate cards
Your B2B clients frequently pay with corporate cards, purchasing cards, and premium rewards cards—exactly the types that often get pushed into higher tiers under tiered pricing. Under interchange-plus, you pay the actual cost for these cards rather than an arbitrarily inflated tier rate.
Varied transaction methods
B2B operations naturally involve more keyed-in transactions (phone orders, recurring billing), online payments, and card-on-file arrangements. Each of these can trigger higher tiers in tiered pricing, even when the actual interchange cost difference is minimal.
Volume and growth
B2B merchants processing significant volume have real negotiating power on processor markup. But this power is only useful if you can see what the markup actually is—which tiered pricing obscures.
Real-world example:
A B2B supplier processing $2 million annually might see an effective rate of 2.8% under tiered pricing, where many transactions fall into mid and non-qualified tiers.
Under interchange-plus pricing with a competitive processor markup, that same transaction mix might result in an effective rate of 2.3%.
That’s a $10,000 annual difference—money that flows straight to your bottom line.
How to choose the right model for your business
Ask yourself these key questions:
1. What does your transaction mix actually look like?
Pull your last three months of statements. What percentage of transactions are swiped versus keyed? How many are online? What portion are business cards versus consumer cards? If you see significant variety, interchange-plus will likely serve you better.
2. How is your business evolving?
If you’re expanding from in-store only to e-commerce, adding phone orders, or seeing more clients pay with corporate cards, your transaction mix is diversifying. A pricing model that works today might cost you significantly more tomorrow.
3. What’s your processing volume?
Higher volume gives you more negotiating leverage, which is only useful under interchange-plus where you can clearly see and negotiate the processor markup.
4. How much do you value transparency?
If understanding your costs, having clear statements, and maintaining control over your processing expenses matters to you—and it should—interchange-plus is the better choice.
5. What’s your risk tolerance?
Some business owners prefer the perceived stability of knowing their three tier rates, even if it means paying more overall. Others prefer to see true costs and optimize accordingly. Neither is wrong, but know what you’re trading off.
Making the switch: What to do next
If you suspect you’re on tiered pricing and it’s costing you money, here’s your action plan:
- •Request a detailed statement analysis. Ask your current processor for a breakdown showing how many of your transactions hit each tier and why. This often reveals that a surprisingly high percentage fall into mid or non-qualified buckets.
- •Get interchange-plus quotes. Reach out to processors that offer interchange-plus pricing. Be specific about your transaction volume, average ticket size, and transaction mix. Get quotes with the markup clearly stated.
- •Do the math. Calculate what your costs would have been under an interchange-plus model based on your actual transaction history. Many processors will do this analysis for you during the sales process.
- •Look beyond the rate. Compare monthly fees, PCI compliance fees, equipment costs, gateway fees, and contract terms. A lower processing rate doesn’t help if you’re paying $150 per month in fixed fees versus $25 elsewhere.
- •Negotiate. Once you understand interchange-plus pricing, you have leverage. Processors can negotiate on their markup. Higher volume merchants can often secure markup rates below 0.25%.
- •Review regularly. Whichever model you choose, review your statements quarterly. Your transaction mix changes over time, and so does your leverage with processors as your volume grows.
The bottom line
For most B2B merchants, interchange-plus pricing offers better long-term value. The transparency lets you understand your true costs, the flexibility adapts as your business evolves, and the negotiating power helps you secure competitive rates.
Tiered pricing might work for a very small business with extremely simple, predictable transactions—but that’s rarely the reality for growing B2B companies dealing with corporate clients, multiple sales channels, and varied payment types.
The pricing model you choose is one of the most impactful decisions you can make about your payment processing infrastructure. It’s not just about the rate you pay today—it’s about having visibility into your costs, maintaining control as you grow, and ensuring you’re not leaving money on the table every time a customer swipes their card.
Take the time to understand what you’re currently paying and why. The few hours you invest in analyzing your processing costs could easily save you thousands of dollars annually. That’s money that belongs in your business, not hidden in opaque pricing tiers.
Ready to evaluate your current processing costs?
At Skyline Payments, we specialize in helping B2B merchants uncover hidden costs in their payment processing. We’ll analyze your statements, calculate your true effective rate, and determine whether you’re on the right pricing model—or leaving money on the table.
Most businesses discover savings opportunities within the first review. Let’s take a look together.
Disclaimer: The information in this article is current as of November 2025 and represents general guidance on payment processing pricing models. Actual rates, fees, and terms vary by processor, merchant category, transaction volume, and other factors. Card network interchange rates are subject to change. Always review your specific merchant agreement and consult with payment processing professionals for guidance tailored to your business. The cost examples provided are for illustration purposes and may not reflect your actual processing costs.
