Explained to kids!
When a shop takes a card, it pays a small fee on every sale. Blended pricing means one simple price for everything, like “2 cents per euro, always.” Interchange++ means the shop sees the three real pieces of the fee, one by one, and pays exactly what each one costs.
Let’s see it in real life…
Anaya’s grandpa Vikram has a flower stall at the Sunday market. Anaya helps him wrap the bouquets.
Two people come to sell him a card machine.
The first one says: “Easy. Two cents on every euro. Always the same.”
The second one opens a notebook: “Here is what the customer’s bank takes, here is what the card company takes, and here is my small coin on top. You see all three.”
Grandpa scratches his head. Anaya asks: “Which one is cheaper?”
“It depends on the cards,” says the second seller. “A plain bank card costs almost nothing. A fancy gold card costs more.”
Grandpa looks at his customers: mostly neighbors with plain cards. With the notebook, he would pay less than two cents on most sales.
“But I would have to read the notebook every month,” he sighs. The first seller nods: “With me, you never think about it.”
Anaya has an idea: “Try the notebook for one month, and count.” Grandpa laughs: “Deal.”
A month later, the notebook won. But Grandpa keeps the first seller’s card: “For my cousin’s hotel, with all those gold cards, the simple price might be better.”
That is interchange++ versus blended pricing.
Tiny recap
- It means… the card fee has three pieces: the customer’s bank, the card company, and the shop’s own provider. Blended hides them in one price; interchange++ shows them.
- It helps when… a shop wants to know what it really pays, and has lots of cheap, plain cards.
- Watch out for… “simple” can cost more, and “detailed” means someone has to read the bill.
…detailed for specialists
Interchange++ (IC++) is a card pricing model where the merchant pays three separately itemized layers: the interchange fee set by the schemes and paid to the issuer, the scheme fees paid to Visa or Mastercard, and the acquirer’s own margin. Blended pricing folds those layers into one flat rate per transaction, set by the provider.
The choice matters more in 2026 because the layers are moving in opposite directions. Interchange is capped in Europe and under attack in the United States, scheme fees keep rising, and regulators are asking for line-by-line transparency. A platform that resells payments needs to know what it buys and what it sells.
What are the three layers of a card fee?
- Interchange. Paid by the acquirer to the card issuer on every transaction. The schemes publish the tables; the rate depends on card type, region, channel and merchant category. In the EEA, the Interchange Fee Regulation caps consumer cards at 0.2% for debit and 0.3% for credit; commercial cards and three-party schemes are outside the cap. Our interchange fees episode goes deeper.
- Scheme fees. Paid by the acquirer to the network: assessment, authorization, cross-border, FX and a growing list of service fees. The UK Payment Systems Regulator found that Mastercard and Visa raised core scheme and processing fees by more than 25% in real terms between 2017 and 2023, costing UK businesses at least GBP 170 million a year. The scheme fees episode lists them.
- Acquirer margin. What the acquirer, PSP or PayFac keeps for processing, risk, funding and support. This is the only layer the provider controls.
IC++, IC+ and blended: how do the models differ?
- Interchange++: the merchant is invoiced interchange at cost, scheme fees at cost, and a fixed margin, for example 0.10% + EUR 0.05. Three lines, every transaction. The merchant bears the variability of the first two layers.
- Interchange+: interchange at cost, with scheme fees and margin combined into one markup. Common in the United States, where it is often simply called “interchange plus”.
- Blended (or flat): one rate for all cards, sometimes with two or three tiers (qualified, mid-qualified, non-qualified). The provider sets the rate above its expected average cost and keeps the difference on cheap cards, while absorbing the loss on expensive ones.
In the EEA, the IFR makes unblended pricing the default: acquirers must offer merchant service charges broken down by card category and brand, unless the merchant asks in writing for a blended rate. Article 12 adds that each transaction statement shows the merchant service charge and the interchange fee separately, with aggregation only on the merchant’s explicit consent.
Who benefits from each model?
Blended pricing moves cost risk from the merchant to the provider, and is paid for with a premium. It suits small merchants with low volume, no finance team and no appetite to read a 40-line statement. It also suits the provider, whose margin grows every time a customer pays with a cheap domestic debit card.
Interchange++ moves the risk back to the merchant, and the savings with it. A European retailer with a 0.2% debit-heavy mix pays its real cost plus a thin margin instead of a 1.4% average built for the worst case. The price is complexity: every change in a scheme fee lands on the invoice, FX and cross-border transactions arrive at different rates, and someone must reconcile three cost layers against the gross payment. Above a few million per year, most merchants and all large platforms move to IC++ or IC+.
The one case where blended can be cheaper is a mix dominated by premium, commercial or cross-border cards, where the provider’s average underestimates the real cost. Those merchants should ask for an IC++ quote and compare it to their actual card mix, not to a hypothetical one. Our money-saving guide to payment processing fees shows how to run that comparison.
Interchange++ and blended pricing in numbers (2026)
- EU caps: consumer interchange capped at 0.2% for debit and 0.3% for credit under Regulation 2015/751, with unblended pricing as the default.
- US cost: US merchants paid USD 198.25 billion in processing fees in 2025, a weighted average of 1.59% of purchase volume, up from USD 187.20 billion in 2024, with credit cards accounting for 79% of fees.
- US debit cap: Regulation II limits regulated debit interchange to 21 cents plus 0.05% of the transaction, plus a 1-cent fraud adjustment, a rule in place since October 2011. The Fed’s 2023 proposal would cut the base to 14.4 cents and the ad valorem part to 4 basis points.
- US litigation: in Corner Post v. Board of Governors, a federal court vacated Regulation II on August 6, 2025, then stayed its own order pending appeal, to avoid an unregulated debit market.
- UK scheme fees: at least 25% higher since 2017, at least GBP 170 million a year; the PSR’s remedies consultation proposes fee information, pricing governance and regulatory financial reporting.
- UK-EEA cross-border: the PSR concluded in December 2024 that a price cap was the only effective remedy for post-Brexit increases on UK-EEA card-not-present interchange, then decided in October 2025 not to impose an interim cap before a full methodology exists.
Where is pricing regulated?
Europe regulates interchange and transparency, not margins. The United States regulates debit interchange only, through Durbin, and leaves credit cards to the market and the courts; the payment methods in the United States guide covers the card mix behind the 1.59% average. The UK copied the EU caps domestically, then watched cross-border UK-EEA rates jump after Brexit and scheme fees rise, which is why the PSR has two open reviews. Australia, Canada, Brazil and India each cap or negotiate interchange on their own terms. For a platform, the practical consequence is that a blended rate built for one market is wrong in the next one, and an IC++ contract reveals exactly why.
Interchange++ vs blended: what changes for PSPs, PayFacs and platforms
Buy rate, sell rate and the margin in between
A PSP, PayFac or ISV buys acquiring at a buy rate, almost always IC++ from the acquirer, and sells it to merchants at a sell rate, blended or IC++. The gross margin is the difference, transaction by transaction. A platform that sells blended at 1.5% and buys IC++ earns 1.1% on a 0.2% debit card and loses money on a 2.5% premium corporate card. Pricing per merchant, per card type and per channel is what makes payment revenue predictable rather than accidental, and it requires the PayFac or ISO to see the acquirer’s cost on each transaction, not a monthly total.
Cost data must land on the transaction
Acquirers deliver interchange and scheme fees in settlement files, days after the authorization, in their own formats. Attaching them to the original transaction, in the right currency, is the job that makes IC++ invoicing and margin reports possible. Without it, the platform knows its revenue and its total cost but not which merchants, cards or acquirers it loses money on. Reporting that shows cost per transaction next to revenue is the analytics layer a reseller cannot do without, and the #TheShot episode on full data access explains why direct scheme data makes the difference, as does our article on direct-to-scheme processing.
Routing changes the cost
The same transaction costs a different amount through a local acquirer, a cross-border acquirer or a local debit network. On IC++, that difference is visible and can be optimized with least-cost routing; on blended, it is invisible to the merchant and belongs to the provider. The acquirers available for this are listed on connectors. NORBr Exports & Reports delivers the per-transaction cost and settlement data a platform needs to invoice on IC++ and measure its own margin.
Compliance evidence
In the EEA, offering unblended pricing by default and showing interchange and MSC separately are legal obligations. Merchant contracts, statements and the written opt-in for blended rates are the audit trail. The report Payments from a merchant’s perspective: a European assessment in the Payments Library documents how merchants read those statements.
Is interchange++ worth it in 2026?
For any merchant above small volume, yes: it is the only model where the price tracks the cost, and where falling interchange or rising scheme fees reach the invoice instead of the provider’s margin. For a PSP, PayFac or platform, the question is different. Buy on IC++, always. Sell on whichever model each merchant segment will understand, price it from real cost data, and keep the margin visible per transaction. Blended pricing is a product choice, not an accounting shortcut, and it only works when the provider can see what it is blending.
Frequently Asked Questions
What is interchange++ pricing?
A card pricing model where the merchant pays three itemized layers: interchange at cost (paid to the card issuer), scheme fees at cost (paid to Visa or Mastercard), and the acquirer’s fixed margin. Each transaction shows all three, so the price follows the real cost of the card used.
What is the difference between interchange++ and blended pricing?
Interchange++ passes interchange and scheme fees through at cost and adds a fixed margin, so the rate varies with the card. Blended pricing charges one flat rate for every card. Blended is simpler and usually more expensive; interchange++ is cheaper for most card mixes but requires reading a detailed statement.
What is interchange+ (IC+)?
Interchange+ passes interchange through at cost and combines scheme fees and the provider’s margin into a single markup. It sits between interchange++ and blended pricing, and is the common form of cost-plus pricing in the United States, where it is often just called “interchange plus”.
Is blended pricing allowed in Europe?
Yes, but it is not the default. Under the Interchange Fee Regulation, acquirers must offer merchant service charges unblended by card category and brand, and show interchange and the MSC separately on statements. A merchant can still request a blended rate in writing, and many small ones do.
How do PayFacs and platforms price card payments?
They buy acquiring on interchange++ from their acquirer (the buy rate) and sell it to merchants on blended or interchange++ terms (the sell rate). The margin is the difference per transaction, which is why they need per-transaction cost data from settlement files to price each merchant segment correctly.
