Blended pricing, and what the averaging costs you.
One percentage for every card, with the provider absorbing the difference between a cheap debit tap and an expensive rewards card. Predictable, simple, and priced for a portfolio rather than for you.
What this page settles.
Three questions, in the order most people ask them.
How it differs from the other models
Four models turn up in quotes, and it helps to see them side by side.
Tiered has several rates and sorts every transaction into a bucket — qualified, mid-qualified, non-qualified. You get a flattering headline rate and a surcharge schedule you cannot predict.
Blended has one rate for everything. No buckets, no surcharges, no sorting. A debit tap and a corporate purchasing card are billed identically.
Flat rate is the same idea sold at a published consumer-facing price, as Square and Stripe do.
Interchange-plus passes the real cost of each card through and adds a stated markup. The one you can audit.
Blended sits in the middle: simpler and more honest than tiered, less informative than interchange-plus.
What the average costs you
An average has to be priced for a portfolio. The provider does not know in advance whether your next transaction is regulated debit or a premium rewards card, so the rate has to cover both, plus a margin for carrying the uncertainty.
Which means the question is whether your mix is cheaper or dearer than the average the rate was built for.
Cheaper than average — mostly debit, mostly in person, mostly small consumer cards — and you are paying a rate designed for somebody else’s expensive portfolio. You are subsidising them.
Dearer than average — lots of rewards cards, commercial cards, keyed transactions — and the averaging is working for you. The provider is absorbing more than they priced for.
This is not a criticism of the model. It is insurance, and insurance is priced on a pool. It just means the only way to know whether it suits you is to know your own mix, which blended pricing itself will not show you. Ask for the split.
The businesses that lose most to blended pricing are the ones taking mostly debit on larger tickets. The businesses that gain are the ones whose card mix would frighten an underwriter.
Why it is not the same as tiered
Worth separating, because they get lumped together as “bundled pricing” and they are not equally defensible.
Tiered pricing is built around a headline rate that applies to a minority of sales. The quoted number is not what you pay and is not meant to be. The surcharges do the work, and they move with your card mix in ways you cannot see or predict.
Blended pricing quotes one number and charges it. You pay what you were told. The statement is short, the arithmetic is obvious, and there is no gap between the quote and the bill.
So blended has a real virtue: it is comparable. You can hold one blended rate against another and the comparison means something, which is more than can be said for two tiered quotes. What you cannot do is see what the cards underneath actually cost.
When it is the right answer
When predictability is worth money to you. A fixed percentage makes forecasting trivial. For some businesses that is genuinely worth a few basis points.
When your card mix is expensive. The averaging is in your favour.
When your volume is small enough that the difference is immaterial and the time spent on it is better spent elsewhere. This is a real and underrated answer.
When the alternative on offer is tiered. Blended is a clear improvement.
It is the wrong answer when your mix is cheap, when your volume is substantial enough for the gap to matter, or when you want to know what you are paying for. In those cases the question is not the rate, it is the model. Price one month both ways and let the number decide.
What we charge
Interchange + 0.50% + 10¢ in person, interchange + 0.75% + 25¢ keyed. Interchange passes through at cost, so a cheap card is billed as a cheap card and our margin is the same either way.
Send us a statement and we will price the same month on both models. If blended comes out ahead on your card mix, we will tell you.
While we are on the subject
Is blended pricing the same as flat rate?
They are close. Flat rate usually means a published consumer-facing price like Square’s; blended usually means a negotiated single rate on a merchant account. The mechanism is the same averaging in both cases.
Is it the same as tiered?
No. Tiered pricing has several rates and sorts your transactions into buckets. Blended has one rate and no buckets, which makes it simpler and more honest about being a bundle.
Can I see my interchange on blended pricing?
Generally not, and that is the defining limitation. If you need to see what the cards cost, the model cannot show you.
Should I move off it?
Only if the arithmetic says so. Price one real month through an interchange-plus quote and compare. For some card mixes blended genuinely wins.