A high ticket is the highest transaction amount that a particular business is likely to run.
When a business first signs up for an account with a credit card processor, the processor completes an underwriting process. The goal of this process is to understand the merchant’s business model and risk profile.
During underwriting, the processor asks for an average ticket amount, referring to the average transaction amount the merchant expects to run. They also ask for a high ticket amount, which is the highest transaction the merchant thinks they will run.
There are two main purposes to these questions. One is to understand how risky the account is overall. A merchant whose high ticket is $100 has a very different risk profile than one whose high ticket is $10,000.
The other purpose of these questions is to set up risk monitoring protocols.
If a merchant’s high ticket amount is $1,000 and they run a transaction for $10,000, the processor wants to be notified. They can then reach out to the merchant and find out if there’s a problem. There might be fraudulent activity occurring, or a cashier might have mistyped the amount. Or, the merchant might have simply sold an expensive product. Either way, the processor needs to understand what happened.
In general, merchants whose high ticket is over $1,000 will be under slightly more scrutiny than those with a smaller high ticket. Businesses with high tickets of $10,000 will have reduced options for credit card processing. Some processors consider these merchants too risky to work with. Others specifically work with higher-risk business models.
If you’re a business owner who runs high-amount transactions, it’s essential to work with a processor and acquiring bank that understand your business.
When you apply for a new credit card processing account, your processor will ask for your high ticket amount. Although you may not know exactly what your highest transaction will be, you can provide an estimate. Your answer will depend on your industry, business model, and past experience.
It’s in your best interest to be as honest and accurate as possible. If the answer you provide ends up being too low, your processor may hold funds unnecessarily. On the other hand, if your answer is unrealistically high, the processor may see it as a red flag.
If you’re a restaurant owner, you might list a high ticket of $600. Your average ticket would be lower, but this amount accounts for large parties.
After approving your account, your processor will continue to monitor your activity for unusually high transactions. If you know you’ll need to run a large transaction, you can notify them.
After a few months of processing, a customer might ask if you can cater a special event. You agree and quote a price of $10,000. It’s a good idea to call your processor and let them know the amount and date of the charge to avoid any issues.
If you don’t notify your processor, their system will flag the transaction. They’ll reach out to you to ask about it and request a copy of the invoice. In some cases, they’ll contact the customer’s bank to ensure that no fraud has occurred.
For a transaction of this amount, the verification process can take a few days. During this time, the processor will hold the transaction amount.
Once the transaction has been verified, you’ll receive your funds. If the processor is unable to verify the payment successfully, they will reverse the transaction.« Back to Glossary Index
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