Average ticket size can be used to calculate how merchants choose to conduct businesses with banks. The calculated amount is extremely important in determining risks and evaluating the company. An average ticket size or average ticket limit when evaluating a new client.
What is it?
The average ticket size is calculated by using the average dollar amount of a credit card transaction. Sometimes the metric is referred to as the average ticket. The amount the average customer spends for goods or services are used to calculate these amounts. The credit card transactions are determined by calculating the average amount of a transaction in the future.
How is it calculated?
The business divides the total amount credit card transactions by the number of transactions made in order to identify the value. If working with a merchant account solutions provider, the amount is calculated during a statement review. The calculation is basically the average unit value.
Formula: average size of sales / credit card amount
Compared to average ticket limit
In some cases the average ticket limit is requested. The highest sale amount can be provided to the institution instead of the average ticket size. Merchants who process smaller tickets more often than larger ones may benefit from this model.
How average ticket size impact how business is done with a bank?
If a merchant’s average ticket size is above thousand dollars, the banking institution may require more of the applicant. The person may have to apply additional documentation. A transaction history can span three months of recent financial statements. Additionally, tax returns may be required.
Why is it used?
The average ticket is used to better understand how much a risk taking on a merchant would be for a processor. The institutions use this when evaluating an applicant. The amount can also be used to determine profitability. The credit card processing volume is requested in addition to the average ticket.
Average ticket amount is used to evaluate the merchant. When applying for a merchant account, the average ticket limit or the average ticket size is requested in addition to the credit card processing volume. Merchant account applicants may be required to offer additional documentation depending on their ticket amount.