Floor limit
Encyclopedia
A floor limit is the amount of money above which Visa
transaction
s must be authorised. The limit can vary from store to store.
Floor limits do not apply to certain types of debit card (such as Visa Electron
and Solo
), as these cards require authorisation for every transaction to prevent the cardholder becoming overdrawn
.
The term floor limit comes from the days when it was the maximum amount which could be approved on the floor (of the retailer), beyond which the cash register operator would have to call for approval.
Floor limits were of more significance in the past, when most credit card merchants processed transactions by taking a physical imprint of the card rather than electronically swiping the magnetic strip, and obtaining an authorization required time consuming human intervention. With modern magnetic card readers, most merchants and banks will obtain an authorization even on very small charges, as it costs little to do so and helps protect against fraud. However, the concept of a floor limit may still come into play in certain cases. A few merchants still use the older system of taking a physical imprint of the card. Additionally, if the merchant or merchant's bank has trouble contacting the customer's bank due to computer network issues, transactions under a certain floor limit will still be approved electronically immediately.
. However, a transaction of $30.00 (or more) would require authorisation to confirm that the customer has the necessary funds available in their bank account
.
Visa
Visa or VISA may refer to:* Visa , a document issued by a country's government allowing the holder to enter or to leave that country...
transaction
Financial transaction
A financial transaction is an event or condition under the contract between a buyer and a seller to exchange an asset for payment. It involves a change in the status of the finances of two or more businesses or individuals.-History:...
s must be authorised. The limit can vary from store to store.
Floor limits do not apply to certain types of debit card (such as Visa Electron
Visa Electron
Visa Electron is a debit card available across most of the world, with the exception of Canada, Australia, Ireland and the United States. The card was introduced by VISA in the 1980s and is a sister card to the Visa Debit card...
and Solo
Solo (debit card)
Solo is a debit card in the United Kingdom. It is a sister to the UK Maestro debit card. Solo was launched on 1 July 1997 by the Switch Card Scheme for use on deposit accounts, as well as by customers who did not qualify for a Maestro card on current accounts.Solo was formerly issued as a...
), as these cards require authorisation for every transaction to prevent the cardholder becoming overdrawn
Overdraft
An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero. In this situation the account is said to be "overdrawn". If there is a prior agreement with the account provider for an overdraft, and the amount overdrawn is within the authorized overdraft...
.
The term floor limit comes from the days when it was the maximum amount which could be approved on the floor (of the retailer), beyond which the cash register operator would have to call for approval.
Floor limits were of more significance in the past, when most credit card merchants processed transactions by taking a physical imprint of the card rather than electronically swiping the magnetic strip, and obtaining an authorization required time consuming human intervention. With modern magnetic card readers, most merchants and banks will obtain an authorization even on very small charges, as it costs little to do so and helps protect against fraud. However, the concept of a floor limit may still come into play in certain cases. A few merchants still use the older system of taking a physical imprint of the card. Additionally, if the merchant or merchant's bank has trouble contacting the customer's bank due to computer network issues, transactions under a certain floor limit will still be approved electronically immediately.
Example
If a store has a floor limit of $30.00, a purchase costing $29.99 (or less) would not need to be authorized by the customer's bankBank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
. However, a transaction of $30.00 (or more) would require authorisation to confirm that the customer has the necessary funds available in their bank account
Bank account
A Bank account is a financial account recording the financial transactions between the customer and the bank and the resulting financial position of the customer with the bank .-Account types:...
.