If you've ever received a payment processing proposal with three rows of numbers — interchange, scheme fees, and an acquirer markup — you've encountered IC++ pricing. It's widely considered the most transparent pricing model in card payments. Yet in practice, it's also the one most frequently misunderstood, misquoted, and misused to make merchants think they're getting a better deal than they actually are.
Here's a plain-English guide to how it actually works — and where the money quietly disappears.
IC++ breaks your processing cost into three distinct layers:
The appeal of IC++ over blended pricing (a single flat rate per transaction) is that you see exactly what each component costs. There's no cross-subsidisation where your low-cost debit transactions are priced the same as your high-cost premium credit or corporate card transactions. You pay the actual underlying cost, plus a clear margin.
This matters because card mix varies enormously by merchant. A subscription business where most customers use UK debit cards will have very different underlying costs to a B2B travel company processing large corporate Amex transactions. A blended rate that suits one will significantly overcharge the other.
Despite its transparency, IC++ has several areas where costs can quietly accumulate:
Many PSP proposals include a minimum fee per authorisation — typically £0.04–£0.08 per transaction. On a high average order value this is negligible. On a business processing £5 subscription renewals, it can represent a significant markup above the headline IC++ rate.
Some acquirers bundle Visa and Mastercard scheme fees into the "IC" row of their statements, making it appear the interchange is higher than it is. This obscures how much is genuinely passthrough regulation versus the acquirer's own commercial decisions about how to price scheme fees.
Strong Customer Authentication (3DS) is not free. Neither are fraud scoring tools, token services, or network tokenisation. These are often line items that don't appear in the headline rate but appear on monthly invoices. A proposal that shows a 0.10% markup but charges £0.03 per 3DS transaction will cost significantly more for a merchant where 3DS applies to every payment.
For merchants accepting currencies other than their settlement currency, most acquirers charge a foreign exchange conversion fee on top of interchange — often 1.00–1.50%. This is almost always negotiable for merchants with meaningful international volume.
To understand what you're actually paying, calculate your effective rate: total fees paid ÷ total transaction value processed. Then compare this to what the published Visa and Mastercard interchange tables suggest your card mix should cost. The difference is your acquirer's effective margin — including all the ancillary fees above.
If your effective rate is more than 0.30–0.40% above your expected interchange cost for UK/EU consumer cards, there is almost certainly room to negotiate or to find a more competitive provider.
A typical IC++ acquirer markup for a mid-market merchant processing £10M+ annually in the UK. Many merchants paying blended rates are paying effectively 0.50%–0.80% above interchange on the same volume.
For a UK merchant processing over £5M per year primarily in domestic consumer cards, a competitive IC++ markup should be in the range of 0.10%–0.20%, with authentication fees below £0.03 per transaction and no fixed monthly management fee. Anything materially above this, at that volume, suggests the current agreement hasn't been reviewed in some time — or was never negotiated at all.
The good news is that IC++ pricing is inherently competitive: once you understand the structure, it's straightforward to put providers on a level playing field and run a meaningful comparison. We do this for our clients regularly, and the results consistently show savings of 20–35% on current processing costs without any change in provider.
We review your existing processing statements, model your true effective rate, and tell you exactly what a competitive offer should look like — with no obligation.
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