Blended Fees KPI

Blended Fees

The Blended Fees or the Blended Pricing KPI quantifies the all-inclusive flat fee that merchants pay to payment service providers (PSPs) for processing card transactions. This fee consolidates three components—interchange fees (paid to the issuing bank), card scheme fees (paid to networks like Visa or Mastercard), and processing fees (charged by the PSP)—into a single, predictable rate, typically expressed as a percentage of transaction value (e.g., 2.9%) plus a fixed per-transaction fee (e.g., $0.30). For example, a $100 transaction with a blended rate of 2.9% + $0.30 would cost $3.20. Unlike tiered or interchange-plus pricing, blended pricing simplifies billing by applying a consistent fee across all card types and transaction variables, with the PSP managing individual fee components in the background.

This KPI is particularly relevant for small to medium enterprises (SMEs) with lower transaction volumes, as it offers simplicity and predictability, reducing the complexity of tracking variable fees. However, this model obscures the breakdown of individual fees, potentially leading to higher overall costs for merchants unaware of underlying interchange or scheme fee variations, especially for high-risk or premium card transactions. For PSPs, blended pricing is a competitive offering to attract SMEs, streamlining their operations while covering risk and fraud management costs. Customers may face higher prices if merchants pass on these fees, particularly if the flat rate is less cost-effective than other models.

Monitoring this KPI helps merchants assess the trade-off between simplicity and cost transparency, enabling comparisons with other pricing models like interchange-plus to ensure alignment with transaction volume and business needs, ultimately supporting financial planning and cost optimization.