DEFINITION of 'Zero-Floor Limit'

A retail authorization system in which all of a merchant's credit or debit transactions must be checked against the card's outstanding balance due and/or any Warning Bulletin listings about past-due or over-limit accounts before processing. Floor limit refers to the limit above which credit or debit transactions require authorization - when that limit is zero, all transactions require authorization, regardless of their size.

BREAKING DOWN 'Zero-Floor Limit'

The zero-floor limit is especially applicable in situations where the merchant does not have physical access to the customer's credit card, such as online and mail-order merchants. In such cases, the floor limit is always zero. Authorization is provided electronically through the debit or credit card's issuer.

RELATED TERMS
  1. Standard Floor Limit

    The amount of money that can be charged in a transaction before ...
  2. Authorized Transaction

    A credit card purchase for which the merchant has received approval ...
  3. Merchant Discount Rate

    The rate charged to a merchant by a bank for providing debit ...
  4. Acquirer

    1. The firm which is purchasing a company in an acquisition. ...
  5. Over-Limit Fee

    A fee charged by a credit card company if a credit card user ...
  6. Debit

    An accounting entry that results in either an increase in assets ...
Related Articles
  1. Personal Finance

    Debit Cards: Why They're Not As Safe As You Think

    Ditching your credit card can be a smart move, but debit isn't yet an equal alternative.
  2. Personal Finance

    How Debit Cards Work

    Unlike credit cards, debit cards rely only on the funds available in the user’s account, so they do not let users borrow on credit. They frequently come with purchase limits, and using one at ...
  3. Tech

    How To Keep Your Debit Card Transactions Safe

    Debit card use has become more popular than ever, but not every consumer knows what they need to do to make sure they keep their debit card safe.
  4. Investing

    What Does Debit Mean?

    Debit is an accounting term used to refer to the left side of an accounting journal entry. Each debit must be offset by an equal credit entry.
  5. Personal Finance

    4 Tips for Using Credit Cards Overseas

    Overseas travel can be both confusing and expensive, so here are some ways to minimize the cost of spending abroad.
  6. Personal Finance

    What Does a Merchant Bank Do?

    A merchant bank is a financial institution that performs underwriting, loan services, financial advising and fund raising services to large corporations.
  7. Personal Finance

    How To Get Your First Credit Card

    Here's a rundown of how you can go about getting your first credit card.
  8. Small Business

    How to Use Small Business Credit Cards

    A business credit card can be a convenient way to increase your company's purchasing power, but must be carefully managed.
RELATED FAQS
  1. How do you calculate credits and debits in the general ledger?

    Know the key points when balancing a ledger and why it's essential to understand the relationship between credits and debits ... Read Answer >>
  2. What are the differences between debit cards and credit cards?

    Learn how the major difference between a debit card and a credit card is where the money comes from when a customer makes ... Read Answer >>
  3. What are some examples of debit notes in business-to-business transactions?

    Review some examples of debit notes in business-to-business transactions and learn why debit notes would be used instead ... Read Answer >>
  4. How do secured credit cards help me build my credit score?

    Find out how secured credit cards function and why they can be very useful for those looking to build or rebuild their credit ... Read Answer >>
  5. How do I get a higher limit on my credit cards?

    Understand how credit limits work with major credit card companies and things you can do to get a higher limit on your credit ... Read Answer >>
Trading Center