Average Ticket Size or AVT is the average dollar amount of the credit card transactions that a merchant anticipates processing or ultimately processes over a certain time. It essentially refers to how much the average customer will spend through the merchant for goods or services over the course of a typical one-month cycle.
The anticipated average ticket size is always requested by a banking representative when a merchant or business (or business representative) sets up a new merchant account. If this business does not currently process credit cards, then it is appropriate to simply make an estimate of what the amount of the average credit card sale will be. A vast majority of the time, credit card transactions are typically higher than cash transactions.
If a merchant or business already processes credit cards, that merchant or business divides their total monthly credit card volume by the total number of credit card transactions to arrive at the average ticket size. Often this average amount will be summarized and printed on the merchant’s monthly merchant account statement for easy review.
Ultimately, merchant account rates and fees assessed and charged by acquiring banks and independent sales organizations are based on the amount of business a merchant conducts monthly, annually, etc. One of the best ways to determine the gross and net earning power of any company (in addition to a business credit rating, the risk level of a business, whether the business accepts payment 90 days before the service that provided is rendered and the monthly volume that a company receives) is by looking at what customers actually spend on average, especially with credit cards.
If a merchant’s average ticket size is between one thousand dollars and some higher amount, then the issuing bank can require that merchant to submit additional documents, such as three months of the most recent bank statements, profit and loss reports and previous tax returns.
Similar to floor or “low” limits, there is an average ticket size common to a merchant’s types of sale. It is recognized that occasionally a merchant may process a higher than average transaction. As long as that transaction does not exceed what has been established as a “high” ticket amount, that higher-than-average transaction will proceed without interruption. If, on the other hand, there are transactions that are over the average “high” ticket amount, the funds from that transaction will be held until verification of the transaction has been confirmed, usually in less than a single business day, but sometimes up to a week or more.