Floor Limit

Typical payment card transactions mandate that the merchant obtain authorization from the card issuer prior to completing a sale.  On smaller purchases, however, the merchant may be allowed to skip this step. A floor limit is simply the maximum amount a user's card can be charged without requiring authorization from the bank.

Floor limits were designed to protect consumers (by keeping them from overdrawing their account) as well as minimize merchants' and card issuers' potential losses from fraudulent transactions.  Because gaining authorization was time-consuming and required  human intervention, however, the hassle of authorization on smaller purchases outweighed the risk of loss.

Floor limits were more relevant when retailers needed to take a physical card imprint for each purchase. Today, however, most merchants can easily and automatically gain authorization directly  through their point-of-sale sale terminals. The speed and ease of modern transactions have essentially rendered floor limits obsolete. POS terminals can be set to require verification even for relatively small amounts.