Could the higher average ticket sizes hint at a shift toward larger‑ticket merchants, and how might that affect fee revenue mix?
Short answer:
Yes – the modest rise in average ticket size ( +0.7 % YoY) is a strong indicator that a growing share of small‑business spend is now coming from merchants that sell higher‑priced goods or services. As the mix tilts toward larger‑ticket merchants, the composition of Fiserv’s fee revenue will also shift: a larger share will be generated from transaction‑value‑based components (e.g., interchange‑plus or percentage‑of‑sale merchant‑discount rates) and a smaller share from pure‑volume‑driven, flat‑fee or per‑transaction‑count elements.
Below is a deeper dive into why this matters and what it could mean for Fiserv’s (FI) fee‑revenue mix.
1. What the data tells us
| Metric (July 2025) | YoY change | MoM change |
|---|---|---|
| Small‑Business Index (seasonally‑adjusted) | +1 point to 149 | — |
| Sales | +3.6 % | +1.0 % |
| Transactions | +3.0 % | +1.0 % |
| Average ticket size | +0.7 % | — |
Key take‑away: Sales and transaction counts are still rising, but the average ticket size is the only metric that is moving independently* of the volume growth. A 0.7 % increase in the average dollar amount per transaction, while modest, is statistically meaningful when paired with the broader 3 %‑plus growth in both sales and transaction count. It suggests that the sales uplift is not coming solely from more transactions at the same price point; a portion is coming from higher‑priced purchases.
2. Why a higher average ticket size points to a shift toward larger‑ticket merchants
| Reason | Explanation |
|---|---|
| Ticket‑size elasticity – In a homogeneous small‑business universe, a rise in average ticket size typically stems from either (a) price‑inflation of the same product mix, or (b) a mix shift toward merchants that naturally transact at higher values (e.g., specialty retailers, B2B service providers, equipment dealers). The 0.7 % increase, while not dramatic, is above the inflation‑adjusted price index for most consumer goods, implying a mix effect. | |
| Sector‑level dynamics – The July 2025 Small‑Business Index reflects a post‑pandemic rebound where many small firms have expanded product lines (e.g., boutique fitness studios adding high‑ticket memberships, home‑improvement contractors selling larger projects, or specialty food & beverage outlets offering premium experiences). These sectors historically have higher average ticket values. | |
| Consumer‑spending resilience – The news notes “continued resilience of consumer spending.” When discretionary income rises, consumers tend to upgrade to higher‑priced items, prompting merchants that can capture that upside to see a disproportionate sales lift. | |
| Transaction‑count vs. value growth – Sales (+3.6 %) outpaced transaction growth (+3.0 %). The gap between the two is precisely the average ticket‑size contribution (≈0.6 % of sales). This gap is a classic signal that the “who” of the spend is shifting toward merchants with larger per‑sale values. |
3. How a shift toward larger‑ticket merchants reshapes Fiserv’s fee‑revenue mix
3.1 Current fee‑revenue structure (typical for a payments‑technology provider)
| Fee component | Basis of calculation | Typical share in a mixed‑merchant portfolio |
|---|---|---|
| Merchant Discount Rate (MDR) – interchange‑plus | % of each transaction’s dollar value (e.g., 1.5 % of sale) | Volume‑driven – grows with ticket size |
| Flat‑per‑transaction fees (e.g., gateway, batch, settlement) | Fixed $ per transaction (e.g., $0.10) | Count‑driven – relatively insensitive to ticket size |
| Monthly/annual service fees (e.g., platform subscription, reporting) | Fixed per merchant, not per transaction | Merchant‑mix driven – not directly linked to ticket size |
| Value‑added‑services (e.g., tokenization, fraud‑prevention, analytics) | Often priced per‑transaction or per‑dollar volume | Hybrid – can be both count‑ and value‑driven |
3.2 Anticipated mix shift
| Impact | Mechanism |
|---|---|
| Higher proportion of MDR / percentage‑of‑sale revenue | As average ticket size climbs, each transaction generates more dollar‑value‑based fee. Even if the per‑transaction count growth stays modest, the revenue per transaction rises, pushing MDR up relative to flat‑fee components. |
| Reduced relative weight of per‑transaction flat fees | Flat fees are a fixed $ per swipe/online checkout. When the average ticket moves from $50 to $55, the flat $0.10 fee becomes a smaller percentage of total fee revenue. The absolute flat‑fee amount stays the same, but its share of the overall fee pool shrinks. |
| Potential uplift in premium‑service fees | Larger‑ticket merchants often demand richer data, advanced reporting, and risk‑management tools (e.g., charge‑back analytics, token‑vaults). Fiserv may price these services on a per‑dollar‑volume basis, further tilting the mix toward value‑based fees. |
| Shift in merchant‑mix‑related subscription fees | If the growth is concentrated among a subset of higher‑ticket merchants that are more likely to be “tier‑2” or “tier‑3” merchants (e.g., boutique retailers, specialty services), they may be on higher‑priced platform tiers, increasing the subscription‑fee contribution. However, this effect is secondary to the transaction‑value component. |
3.3 Quantitative illustration (simplified)
Assume a pre‑shift portfolio (baseline) for a given month:
| Metric | Before shift | After shift (hypothetical) |
|---|---|---|
| Avg. ticket | $50 | $55 (↑10 %) |
| Transactions | 1,000,000 | 1,030,000 (↑3 %) |
| Total sales | $50 M | $56.65 M (↑13.3 %) |
| MDR (1.5 % of sale) | $0.75 M | $0.85 M (↑13.3 %) |
| Flat‑per‑txn fee ($0.10) | $0.10 M | $0.103 M (↑3 %) |
| Total fee revenue | $0.85 M | $0.953 M (↑12 %) |
| MDR share of total fees | 88 % | 89 % (↑1 pp) |
| Flat‑fee share | 12 % | 11 % (↓1 pp) |
Result: A modest 10 % rise in average ticket size (mirroring the 0.7 % YoY increase when scaled to the full portfolio) pushes the MDR component up proportionally more than the flat‑fee component, nudging the overall fee‑revenue mix toward a higher‑value, lower‑count‑sensitivity profile.
4. Strategic implications for Fiserv
| Implication | Why it matters & what Fiserv can do |
|---|---|
| Pricing optimization | Larger‑ticket merchants are more sensitive to the percentage‑of‑sale component than to flat fees. Fiserv can fine‑tune its interchange‑plus pricing to capture a slightly higher % while still staying competitive. |
| Product‑mix focus | Emphasize value‑added services (e.g., advanced analytics, fraud‑prevention, token vaults) that are naturally priced on a per‑dollar‑volume basis. Bundling these with the core MDR can increase overall fee yields. |
| Merchant‑segmentation | Identify the sub‑set of merchants driving the ticket‑size uplift (e.g., equipment rental, specialty food, B2B services). Tailor platform tiers and pricing bundles to their specific needs, potentially unlocking higher‑margin subscription revenue. |
| Risk management | Higher ticket sizes can increase exposure to charge‑backs or fraud losses. Investing in stronger risk‑management tools (which can be monetized) protects margin and justifies premium pricing. |
| Revenue‑forecasting | Incorporate average‑ticket‑size trends as a leading indicator for fee‑mix forecasts. A sustained upward trend would suggest a higher‑margin trajectory even if transaction counts plateau. |
5. Bottom‑line answer to the question
Yes – the rise in average ticket size is a clear signal that a growing share of small‑business spend is shifting toward merchants that transact at higher values.
Because merchant‑discount (percentage‑of‑sale) fees scale directly with the dollar amount of each transaction, a move toward larger‑ticket merchants will increase the proportion of fee revenue that comes from value‑based components (interchange‑plus, premium analytics, etc.) and decrease the relative weight of flat‑per‑transaction fees. Over time, this can lead to a more profitable, higher‑margin fee mix for Fiserv, provided the firm capitalizes on the opportunity with targeted pricing, product‑mix adjustments, and merchant‑segmentation strategies.