When a bank representative sets up a merchant’s business to process credit card and other electronic transactions, he asks for the merchant’s monthly average sales ticket amount to initially determine the level of risk the merchant poses during different transaction situations, such as chargebacks. If the risk is low enough, the bank representative uses the average ticket to determine the correct credit card processing fees to attach to the merchant account.
Determining the Amount
When a merchant switches from another processor, he can usually find the amount on his monthly statement listed as the “Average Ticket” or “AVT.” He can also call his current processor and ask for the information, or he can add the sales for all of his credit card transactions for the last month and then divide the total by the number of transactions.
If the merchant doesn’t have a current merchant account with another processor, the bank representative can help him estimate the amount by looking at one month’s cash sales. As credit card tickets are traditionally higher, the representative first adds together the cash sales and divides the total by the number of sales. He then creates his estimate by comparing the amount to the standard credit card average for that type of business.
Facing Ticket Obstacles
Sometimes the monthly average ticket can be hard to estimate, such as when a merchant regularly experiences random fluctuations between low and high amounts. The bank representative can help the merchant determine the average ticket in this type of scenario.
There are also merchants who regularly have an extremely high average ticket. If this type of merchant is approved for a credit card processing account, his processing fees will be higher than a merchant who has a lower monthly average.
Changing the Amount
As processors usually consider a higher-than-average ticket as “suspicious” account activity, a merchant can experience a funding delay and/or service interruption when he processes a one-time ticket at an amount that is far higher than the initially estimated average unless he warns the processor beforehand.
Some merchants also go through periods where they see higher average ticket sales, such as at during conventions and holidays. A merchant who anticipates this type of change in the amount of his sales must contact his bank representative. Failure to address any change in the average ticket amount could ultimately result in the company closing the merchant’s account.