Your monthly processing volume isn’t just a number that slips into a spreadsheet. It’s a vital metric illustrating how much your business makes, the strength of your cash flow and how much you’ll pay to access a merchant processing account.
You calculate monthly processing volume by tracking the number of monthly credit card charges processed. A new business tracks credit card payments monthly, while well-established companies can track transaction volume fluctuations by comparing months, quarters and years. Once you have transaction data for a year, divide the number of payments by twelve to find your average monthly processing volume.
Table of contents
- How Can Tracking Business Metrics Help Your Business?
- What Does Transaction Volume Mean?
- What’s a Chargeback?
- Why Should I Track My Monthly Processing Volume?
- What Are the Most Common High-Volume Industries?
- How Can a Business Calculate Monthly Processing Volume?
- What Are the Benefits of Understanding Your Average Transaction Value?
- Can I Reduce My Volume Without Hurting My Bottom Line?
- What If I’m a New Business?
- How Can My Merchant Account Provider Help Me Reduce Chargebacks and Costs?
- Partner With Zenti
How Can Tracking Business Metrics Help Your Business?
Merchant account solutions can also track other metrics, helping you learn more about your business, such as:
Quarters with increased credit card payments
What months or seasons do you typically see an uptick in customers using credit cards for payments?
Average cost per payment
Average cost per payment shows you how much profit you lose with each card swipe. Tracking this data informs you when you might need to increase your fees for customer card payments.
Total losses to fraud or chargebacks
This data should include the time of year when you experience the most chargebacks and which products tend to result in refund requests. Knowing when, where and why you’re losing this money can help you find the right solutions.
Your merchant account provider can show you how to find this information and recommend ways to reduce costs and risks.
What Does Transaction Volume Mean?
Transaction volume is the total dollar amount of transactions processed within a specific period. Most of today’s POS systems offer reporting capability and can show transaction volume for the day, week, month and year.
Your business benefits when you know your transaction volume because:
- You’ll see how your averages fluctuate over time.
- You can see which payment methods are popular.
- You’ll uncover deeper insights into current and prospective customers.
The right tools collect this data each time you process a card payment. Even with a high monthly volume, you can qualify for a high-volume merchant account with Zenti.
What’s a Chargeback?
- Not recognizing a charge.
- Dissatisfaction with a purchase.
- Unauthorized or fraudulent orders.
Merchant account providers track monthly processing volume because your potential chargebacks increase as transactions increase.
Why Should I Track My Monthly Processing Volume?
Tracking monthly processing volume offers benefits that positively impact multiple aspects of your business, such as:
- Finding the right merchant account for your business.
- Knowing when your business is nearing or at your monthly processing limit.
- Evaluating your business’s potential for a high-risk classification.
Many merchant account processors set a monthly limit on the number of transactions or dollars you can process. This monthly volume limit reduces chargeback risk but may limit your card processing ability. Say you meet your monthly volume limit a few days before the end of your cycle. Since many people don’t carry cash, you could lose out on substantial sales those last few days.
You may earn a high-risk classification with a high monthly processing volume or work in an industry that typically sees higher volumes. This classification can increase fees and negatively impact profit margins. Lost sales and increased fees could mean adjusting your prices to make the same profit.
A high-risk classification increases the cost of doing business, but it shouldn’t put you out of business. You could see much lower payment processing fees with Zenti. We work with you to develop risk-reduction techniques customized to your business.
What Are the Most Common High-Volume Industries?
Your business could have a higher-than-average transaction volume if you consistently process more than your competitors. Some industries just naturally have higher transaction volumes, such as:
These businesses often charge customers every month.
Bad debt collection services
Consumers might pay their debt using a credit card, resulting in high transaction volumes.
Property management services
Typically, property management businesses accept cash, eChecks and ACH payments. While it’s rare, some property management companies allow credit card payments for rent or maintenance fees.
Travel industry or private airline services
Travel is big business. It’s an industry with high transaction volume, where most transactions are big-ticket items. Businesses in the travel industry regularly process individual payments of over 1000 USD.
There’s no official list of high-volume industries that merchant account providers maintain. For example, one merchant account company may consider a particular industry high-volume, while another doesn’t. Your challenge is finding a merchant account provider who can meet your unique requirements and give you access to the tools you need.
How Can a Business Calculate Monthly Processing Volume?
Calculate your monthly processing volume by tracking the number of charges you process over a month. If you only have information for annual transactions, you can divide that number by twelve. For most merchants, more volume is excellent news. After all, higher volume means more transactions, which means a merchant is successful. But more volume can mean more problems, increasing chargeback risks and raising payment processing costs.
High monthly processing volume requires a solid merchant account partnership. You can manage your risk and reduce costs by partnering with a high-risk merchant account provider. Zenti can work with your business to develop customized solutions that meet your needs.
What Are the Benefits of Understanding Your Average Transaction Value?
Average transaction value helps you understand how your business makes money, where that money comes from and your costs.
Having a better understanding of gross revenue per transaction
You can better understand average sales volume by tracking fluctuations in your business or product offerings. If introducing a new, expensive product doesn’t change the average transaction value, the new product doesn’t affect sales. You might reconsider your new product offering or update your pricing structure.
Gauging your average transaction value against industry counterparts
A higher-than-average transaction value for your industry may be a double-edged sword. It may mean you’re making more money than your competition, but it could also mean your business poses a greater chargeback risk than your competitors.
Getting to know your customers better
Many marketing firms use transaction information to develop an ideal customer profile. The information in the profile illustrates your ideal customer, and can include demographics, messaging they find most appealing and where they spend their time. A competent merchant account provider can help you create this ideal customer persona.
Can I Reduce My Volume Without Hurting My Bottom Line?
Depending on your business model, you can reduce transaction volume without losing money.
Some creative ideas to keep sales flowing, customers happy and revenue up include:
Require recurring payments or offer installment plans
Consider offering financial incentives, like a slight discount, for customers who pay upfront. A financial plan reduces processing costs and keeps more money in your bank account. You might lose a little money on the discount, but fewer processing charges might save you.
Consider limiting credit card transactions
Many stores, especially mom-and-pop shops, require a minimum purchase to run a credit card. This limitation saves the merchant from paying processing fees on smaller transactions. Another option is charging customers a small fee for credit card purchases below a certain amount.
Consider alternative payment options
Alternative payment options reduce your processing volume. EChecks and ACH payments have lower fees than credit cards and offer convenience and flexibility, creating the perfect recipe for encouraging long-term, loyal customers.
What If I’m a New Business?
Your provider should give you safe, reliable access to various payment methods. The best merchant account solutions can accommodate basic payment options, including major credit cards like Visa, Mastercard, American Express and Discover. Your solution should also offer advanced alternative payment methods. Traditional payment methods are no longer enough.
Most businesses today have a physical storefront and an online presence. Online merchants need a safe, secure online payment gateway. Processing fees for online payments should be low and not exceed the fees charged for in-person payment processing. Evaluate and consider non-traditional payment methods, like cryptocurrency, which continues to become more popular.
New businesses need to keep costs low, so you’ll need to consider the costs of a merchant account. A provider should offer an estimate and break down the charges for flat-rate, percentage and equipment, such as an updated POS system. You can consider potential pricing updates if you need to offset your merchant fees.
You’ll also have to ask your potential provider about high-risk classifications and how that might affect your expenses. Merchant account providers can help you avoid a high-risk classification sometimes. In certain industries, this may not be possible. A provider should be able to offer you clear, actionable steps to help you reduce risk, avoid chargeback fees and minimize fraud in your business. These steps are essential for new businesses needing to create solid reputations with customers.
How Can My Merchant Account Provider Help Me Reduce Chargebacks and Costs?
A merchant account provider should offer tools and other perks to mitigate your chargeback risk, such as:
You should have the best security if using an online payment gateway, taking payments via cryptocurrency or using a credit card. Some companies, like those doing business overseas or in a foreign currency, may be more susceptible to hacking. Working with a merchant account provider can protect your customers’ critical financial data, ensuring your business securely processes credit cards.
Reducing chargebacks can be as simple as using paper receipts displaying your company name and product information. You can also email a copy of the receipt to customers. This email can give store contact information, answers to frequently asked questions or instructions for replacing defective products. This email can help reduce chargebacks and become part of your marketing plan.
An experienced merchant account solution can give the best advice possible because they know your high-risk industry and your business needs. This partner should be able to provide you with personalized risk-reduction advice.
Businesses need customized plans that fit specific needs. Some of Zenti’s perks include low- and no-cost processing, multiple ecommerce integrations, niche payment acceptance and modern point-of-sale systems.
Choosing a no-cost processing plan passes your merchant processing fees to the customer. Customers receive a fee alert at checkout if paying with a credit card. The customer can continue with the card or choose an alternate payment method.
Ecommerce stores on sites like Shopify, Stripe or WooCommerce integrate seamlessly with Zenti products and services.
Marketing software easily integrates with our modern POS systems, making it easy to stay in touch with customers.
Almost any accounting program can sync with your POS system, ensuring accurate business records and everything you need when filing business taxes.
Grocery stores offering EBT acceptance and SNAP payments can switch to a Zenti EBT merchant account without needing new equipment.
Modern POS systems with updated security features protect you and your customers’ data.
Merchant accounts with inflexible plans can’t provide the tools you need to maintain your business. Ask about customized programs tailored to fit your needs.
Partner With Zenti
Partnering with Zenti puts years of high-risk industry experience in your hands. Finding the right merchant account processor is a significant challenge for any high-risk business. With Zenti, experience the benefits of payment solutions experts with years of experience in the high-risk payment processing industry. Contact us today to learn more about the high-risk merchant account created with you in mind. Your business can reduce costs, grow and thrive.