I am currently deciding on a merchant service provider. Bancorp looks like they charge a flat .20 per transaction + the current "interchange rate". Doing some homework, I found Visa, MC, and Disc. each have a listing of their intercange rates. This rate seems to involve another flat fee plus a percentage. The additional flat fee and percentage vary depending on the type of card. For example, a card with airline miles rewards has a different charge than a card that is issued by a bank as a debit card. Now I know why Citibank can give me rewards, even though I carry no monthly balance, they just pass it through with a higher interchange rate. Another service provider, my local bank, came in at 1.29% across the board plus 0.21. They use an "average" interchange rate. When I mentioned the 0.20 from Bancorp plus interchange, the local said they could quote it that way also. He called back and said 0.16 plus interchange rate. He says many service providers are quoting this way now because it looks like they are being more upfront, using the interchange rate as a "hey look, we don't mark up the rate" sales pitch. It seems a lot like making a decision between a variable rate mortgage and a fixed rate mortgage. With both banks, there are contracts to sign with early termination charges. My local bank also has $10/mo. statements and a initial fee of $75.00.
I am still trying to sort thru my options, but wanted to share some experiences with you.