This piece of the credit card processing fee pie probably gets the least amount of attention but is vital to understanding your Effective Rate. Simply put, Average Ticket is the average sale price of the items in your business. Here are a few examples:
If you have 1000 credit card transactions in one month, and your total revenue from those sales is $30,000, then your average ticket is $30.
$30,000 / 1000 = $30.00
If you have 500 credit card transactions in one month, and your total revenue from those sales is $50,000, then your average ticket is $100.
$50,000 / 500 = $100
Now that you understand what Average Ticket is, let’s discuss how it effects your Effective Rate
You sell a bottle of wine for $10 and the customer pays for that bottle with their regulated debit card. The regulated debit interchange fee is 0.05% and 0.22 cents (approx. $0.27 cents in total).
This means the interchange fee for this transaction is 0.27%.
$0.27 cents / $10.00 = 0.27%
Let’s change the price of that bottle of wine to $50. The customer still pays for the bottle with their regulated debit card. The regulated debit interchange fee remains 0.05% and 0.22 cents. (approx. $0.47 cents in total).
This means the interchange fee for this transaction is 0.09%.
$0.47 cents / $50.00 = 0.09%
By raising the price of a regulated debit transaction you lower your cost by 0.18%.
All of this is happening before your credit card processor adds a cent to the cost of your transactions. So as you can see, if your average ticket goes up or down in a single month, it can change your effective rate without your credit card processing company changing anything.