Blended, interchange++ or fixed: which card pricing suits a practice

Two providers quote you. One says 0.35% plus 2p. The other says 1.1% flat. A third offers £29 a month for everything up to a limit. These are not three prices for the same thing — they are three different pricing structures, and you cannot compare them without knowing which is which.

This is the part of the decision that is genuinely technical, and it is where most of the money is won or lost.

The three structures

Interchange++ is the transparent one. You pay the interchange fee set by the card scheme, plus the scheme fee, plus the provider's margin, itemised separately. The headline number you are quoted — 0.35% plus 2p — is only that last part. Interchange and scheme fees sit on top and vary by card type.

Advantages: you can see exactly what the provider is taking, and you benefit directly when a customer uses a cheap card. Disadvantages: your bill varies month to month, and the statement is genuinely harder to read.

Blended rolls everything into one rate. Simple, predictable, and the provider absorbs the variation between card types — which means they price in a margin for that risk. Blended is nearly always more expensive over a year than a well-negotiated interchange++ deal, and the gap widens the more consumer debit cards you take, because you pay the blended average on transactions that actually cost the provider very little.

Fixed or subscription pricing charges a monthly fee with transactions at cost or near it. It can be excellent at high volume and poor at low volume, and the break-even is worth calculating rather than guessing.

Which suits a practice

For most private practices, interchange++ is the better structure — because your mix skews towards UK consumer debit cards, which carry low interchange, and blended pricing charges you an average that includes expensive card types you rarely see.

The exceptions are real, though:

• Very low volume. Under roughly £5,000 a month, the admin and the minimum charges outweigh the savings. Take the simple blended deal and spend your attention elsewhere.
• A high proportion of international or commercial cards. Blended can be the safer choice when your mix is genuinely expensive, because you are handing the variation to someone else.
• You value predictability over the last 0.2%. A legitimate preference. Just make it a decision rather than a default.

Comparing quotes honestly

The only way to compare across structures is to price each quote against your actual statement, not against a hypothetical mix.

Ask every provider the same thing: here is a real month of my transactions, by card type and volume — what would this month have cost under your pricing? A provider unwilling to do that on your real data is telling you something.

Then check five things before signing:

1. Contract length and exit terms. Three years with a termination fee is common and is where the leverage goes.
2. Whether hardware is bundled. A separate terminal lease with its own term survives any renegotiation of the processing rate.
3. The annual increase clause. Most contracts permit an uplift by notice. Know the cap, if there is one.
4. What triggers the non-qualifying rate, and what share of your current volume would land there.
5. Minimum monthly charges, and whether your quietest month clears them.

What "a good rate" actually means

For a small UK business on a typical consumer-debit-heavy mix, a good all-in effective rate is around 1% or below. Normal is up to about 1.4%. Above 1.6% is a conversation worth having.

But notice that the useful number is the effective rate — everything paid, divided by everything processed — and not the headline. A 0.35% quote that produces a 1.9% effective rate is not a good deal, and a 1.1% blended quote that produces 1.15% all-in might be an excellent one.

That is the single most useful habit here: judge every offer by what it would have cost you last month, in total, on your real transactions. Everything else is marketing.

If you want a second pair of eyes on a quote, send me the statement and the offer. I will tell you what the offer would actually have cost you.