A take rate is the fee charged on a transaction performed by a seller or service provider. The term became popular amidst the boom of ecommerce. Marketplaces like Amazon charge a take rate on every merchant who makes a transaction on their platform.
We turned the concept of take rates into a feature used by collaborating merchants on Snap-n-Tap so merchants can increase their earnings. Hence the name “Merchant Take Rates.”
Merchant Take Rates can be applied to merchants who are providing additional services within collaborative operations. Earnings from take rates are included in the automated accounting process, ensuring merchants receive their additional money directly in their bank accounts. Merchant take rates can be applied on everything from tips to total sales.
In a collaborative operation such as a public market, the owner of the market charges a 10% commission on all sales made by merchants. This commission is essentially a take rate.
In this case, the owner can set up a Snap-n-Tap account and apply an automatic 10% Merchant Take Rate on Sales. It would work like this:
A customer purchases $100 from Merchant A. Snap-n-Tap applies the 10% Merchant Take Rate on Sales, and transfers $10 to the owner’s bank account. The remaining $90 is sent to Merchant A’s bank account.
A more complex example begins with a collaborative operation where there are two merchants. Both merchants sell their products to the same customers, but only one merchant has the staff size to service the customer.
A customer orders items from two different merchants for a $40 subtotal and applies a 20% tip ($8). Here is the breakdown of the customer’s check by merchant, if we applied Snap-n-Tap’s standard automated accounting process:
But what if Merchant A is the only merchant staffing this collaborative operation, and it’s Merchant A’s staff who is serving the bottle of wine to the customer? What if Merchant B agrees that Merchant A’s staff can collect a portion of their tips since they are running service?
If agreed to between merchants, Merchant A can create a Merchant Take Rate for a percentage (%) of tips collected by Merchant B. This means Merchant A can collect all of Merchant B’s tips (if Merchant Take Rate on Tips is set to 100%), half of Merchant B’s tips (if set to 50%), or any other percentage that is agreed to by both merchants.
With the Merchant Take Rate on Tips agreed to at 50%, the customer’s check with a 20% tip would now look like this:
In the end, Merchant A collects $6 in tips, and Merchant B collects $2. If the Merchant Take Rate was set at 100%, then Merchant A would collect the full $8 in tips, and Merchant B collects $0.
Because collaborative operations essentially act as physical marketplaces, Merchant Take Rates can play an important role. By including Merchant Take Rates in Snap-n-Tap’s automated accounting process, we are able to apply various kinds of take rates in real-time. If you are a merchant or company that provides additional services deserving of a take rate, and want to set up such a workflow, consider reaching out to us.
If you have additional questions on how Merchant Take Rates work, contact us here.