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A Mach-Zehnder interferometer based on a plasmonic channel waveguide is proposed for refractive index sensing. The structure, with a small physical footprint of 20 × 120 μm2, achieved a high figure of merit of 294. The cut-off frequency behaviour in the plasmonic channel waveguide resulted in a flat dispersion curve, which induces a 1.8 times larger change of the propagation constant for the given refractive index change compared with previously reported results.