Card processing pricing comes in a few shapes. The two you'll see most are flat rate and interchange-plus. Understanding the difference is the fastest way to know whether you're overpaying.
First: what is interchange?
When a guest pays by card, most of the fee goes to the guest's bank — the issuer — as interchange. The card networks (Visa, Mastercard, Discover, American Express) set interchange tables, and the rate depends on things like:
- the card type (debit, credit, rewards, business),
- how it was taken (tapped or dipped in person vs. keyed in or online),
- and your merchant category.
Networks also charge small assessment fees. Interchange and assessments are the same no matter which processor you use. Everything on top is the processor's markup.
Flat rate
You pay one percentage plus a fixed fee on every payment — say, a few percent plus a few cents. The processor pays interchange out of that and keeps the rest.
Good: simple and predictable. Easy to compare. Less good: on cheap-to-process cards (like regulated debit), you pay the same as on expensive rewards cards, so the processor's margin is higher on those payments.
Interchange-plus
You pay the actual interchange and assessments for each payment, plus a fixed, published markup — for example, interchange + 0.35% + 8¢.
Good: you see the real cost of each card, and the markup doesn't hide inside it. It's usually cheaper once your volume is meaningful. Less good: your monthly statement varies with your card mix, so it takes a little more reading.
Which is cheaper?
It depends on your average check and your card mix. As a rough rule:
- Small checks (coffee, quick service): the fixed per-transaction fee matters a lot. Compare the cents, not just the percentage.
- Larger checks (full-service dinners, bars): the percentage dominates, and interchange-plus usually wins.
The easiest way to find out is to take a recent processing statement, divide total fees by total card sales, and compare that effective rate against the alternatives. Our calculator does that math for you.
How Tallo prices it
Every Tallo plan lets you bring your own processor. If you'd rather use ours, Tallo Pay has a published flat rate on Free and Pro, and our Plus plan offers interchange-plus at IC + 0.35% + 8¢. See pricing for the details.