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In 2021, Mastercard and Visa processed more than 366 billion card transactions according to Statista, which is an increase of 72 billions from their 2019 pre-pandemic numbers. In terms of volume, VISA and Mastercard reported a payment volume of $11.46 trillion and $6.38 trillion respectively. VISA and Mastercard earn most of their revenue from processing card transactions (charging both issuers and acquirers), so the growth in payment volume translates into revenue growth.

Most of these payments are typically made using #debit or #credit cards, which attracts different floor limits based on the channel, the acquirer, the schemes, the merchant etc.

So let’s dive into floor limit and understand why do they matter?

Simply put, a floor limit is the maximum charge that can be made to a debit or credit card purchase to be processed without requiring prior authorisation. An inclusive limit is configured which applies to each individual transaction.

The #floorlimit term dates from back in the days, when #cashiers used to authorise payments over the phone, calling the bank literally from the sales floor when a customer passed their limit... hence the term.😅.

Good to note that:

👉From a credit risk perspective, #ecommerce transactions are deemed high risk and as a result will pretty much always have a zero-floor limit. This means that all ecommerce transactions are sent for authorisation regardless of the amount.

Floor limits are still relevant in specific context...

#paymentsexperts, Any insights to add please share, comment...

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