What is a floor limit?

Topic: Payment News (Mon 25th Oct 2021)

The term floor limit was introduced back in the days when credit card transactions were authorised by phone. Imagine the scenario; a packed shop floor on a Saturday afternoon with customers lined up to pay for goods on their credit or debit cards.

The process for approving every sale meant checking the card number manually against a physical ledger (often hundreds of sheets of numbers) to look for stolen cards; then ringing acquirers to obtain an authorisation for large transactions. This process was followed for every sale, every day. Retailers would set their own “floor limits” to prevent card fraud.

Nowadays, with almost instantaneous approval via big data technology, the process is entirely automated.

Why increase the contactless floor limit?

Because exceeding the floor limit results in the customer not having to enter their PIN, lower floor limits can cause delays at the till over time. In an age where instant gratification just isn’t quick enough, consumers demand more efficiency and flexibility. Contactless payments, and biometric payments (which have no upper limit), are fast becoming the norm.

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