interchange-plus
Interchange-plus is a card pricing model in which the business pays the actual interchange on each transaction, passed through at cost, plus a fixed acquirer margin. Interchange-plus-plus (IC++) also passes scheme fees through at cost. The margin is the only negotiated part.
Under interchange-plus the three parts of the merchant service charge are shown separately. Interchange goes through at the rate the scheme sets for that card, scheme fees go through at cost under IC++, and the acquirer adds a margin it quotes once and does not change. A domestic debit card costs a little; a foreign commercial card costs more; the business pays what each actually cost plus the same margin.
Why it matters: it is transparent and it tracks cost. When the UK interchange caps or a scheme fee change, an interchange-plus bill changes with them rather than at the acquirer's discretion. The PSR noted that larger merchants tend to be on this model and that the smaller ones on blended rates were the ones who could not see what they were paying. The cost is complexity: a statement with dozens of interchange categories is accurate and hard to read.
For a software platform setting its own fee, interchange-plus is the model that makes the economics legible. The platform's margin is the plus; the cost underneath is public and moves for everyone at once. A platform pricing its customers on a blended rate while paying interchange-plus itself is taking a mix risk on card types, which is fine as long as it knows the mix.