Glossary
Floor Limit
A floor limit refers to the predetermined maximum value of a debit or credit card transaction that can be processed without requiring prior authorization. Historically, floor limits were set to streamline the transaction process by allowing smaller purchases to be completed quickly and conveniently without the need for direct communication with the cardholder's issuing bank.
However, with the advent of modern electronic payment systems, which facilitate automatic authorization checks for every transaction, the concept of a floor limit has become largely obsolete in routine scenarios. These systems can instantly verify transactions of any size, ensuring security and authorization in real time. Nonetheless, floor limits may still hold relevance in specific situations, such as during network outages when automatic authorizations cannot be performed. In these cases, merchants must adhere to the set floor limit, above which they cannot process transactions without manual authorization.
Additionally, certain types of transactions, such as those involving airlines, telephone, and mail orders, require authorization regardless of the amount or the set floor limit. This is to further secure transactions that have higher risks associated with them due to the absence of a physical card during the transaction process. Thus, while the need for floor limits in everyday transactions may have diminished, they continue to serve as a critical control point in particular scenarios, ensuring that transactions are authorized and secure.