Average ticket refers to the dollar amount of a merchant’s average credit card sale, or a mid-range sales amount. It’s calculated by simply dividing your gross credit card sales by the total number of credit card transactions.
Your average ticket amount is more than just a number. It’s typically required when you fill out an application for a merchant account.
Some merchant account providers ask for an average ticket limit rather than an average ticket amount. This simply means that you should provide the highest credit card sale amount you might expect to realize. Or you may be asked to provide both a limit and an amount. This can work in your favor if your average ticket amount is usually fairly low but you have occasional large sales.
Like processing volume, merchant account providers closely watch your average ticket figure. A credit card transaction that grossly exceeds the amount stipulated in your contract with the provider will send up a red flag and could result in financial penalties, frozen funds or even account closure, especially if it becomes the rule rather than the exception with your account.
Merchants who have been in business and accepting payment cards for a while have a basis on which to calculate their average ticket, and they can always use the figure in their current merchant account agreement as a starting point. New businesses will need to work a little harder to come up with a reasonable number.
Consulting with your merchant account sales representative, you should be able to come up with a guesstimate based on your business plan and the type of operation you run. Ballpark what you think the lowest and highest credit card transaction amounts will be, add them together and divide by two to come up with an average. You can then bump this figure up a bit, within reason. As with processing volume, you won’t be penalized if you overestimate your ticket, but underestimating can cost you over time, as outlined above.
Once you start accepting credit cards, keep an eye on both your average ticket and processing volume numbers. If sales really take off, you will need to discuss having your limits raised with your sales rep to avoid financial penalties. This is a case where being proactive is very much to your advantage.
Alternatively, with TransFreedom® from TransFirst®, you can opt for a package of bundled fees and services and pay one flat fee that’s based on your processing volume. We’ll even throw in some additional volume each month if you exceed your tier maximum, plus give you the option of purchasing additional volume when necessary. This innovative pricing package provides serious savings made simple month after month and cuts the time you spend reconciling your statement — time better spent growing your business.
If the idea of no hidden fees, set monthly rates, access to PCI compliance and data breach security programs and the flexibility to expand your operation appeals to you, talk to a TransFirst consultant about TransFreedom today.