Since you own your own business, you are probably one for taking risks. However, there are many areas of your business that are best served with precaution than chance. Your credit card processing limits is one of them. If you decide to go over your monthly processing limit, you could be liable to pay a fee.
What are Credit Card Processing Limits?
Credit card processing limits are the restrictions that the credit card processors put on a business’ credit processing abilities. This is done in an effort to prevent fraud and minimize chargebacks, which can be costly for any business. The limits placed on your card are subject to the type of business you own and the value of your average transaction. Limits are placed on individual sales as well as the overall credit card sales. All you need to do is stay within the processing boundaries, however stepping outside even just a little, will have consequences.
Exceeding your limit is a very bad idea – don’t do it!
When your transaction goes over the monthly processing limits, you credit card processor may see this as a risk. Even though, as a merchant you could sometimes be experiencing a sudden high volume of sales due to higher demand, to the credit card processor it may seem suspicious. To the processor, this may signal higher chargebacks and may raise red flags.
This may pose a problem as you have entered into a business to make money and if you have no way of accessing your capital, you will not be able to purchase stock, market your business or even make a profit. The worst part is that there is no actual way of telling how long your money will not be accessible to you.
Don’t just accept this lying down
You may be wondering what you can do. Whether you should just turn away customers who want to make purchases big enough to feed a village? Then should you stop accepting credit cards once you reach your monthly volume limits.
The short answer is NO. There are many simple solutions to your credit card processing limit problems, and although there is never an absolute guarantee that you won’t have any trouble, you will reduce the chances of having your merchant account frozen.
One solution may be to overestimate the monthly and individual sales volumes in your merchant contract. If you are new to your business then this may be difficult as you may have to wait until you make sales first. However you can give an estimate of what your highest monthly and individual credit card sales will be. Make an informed, well-researched guess. It is far better to have a processing limit that you may not reach instead of having one that you are always beating by a long shot.
If you find that the changes need to be made then you may apply for amendments to your existing processing limits. This will not be a problem especially if you are a merchant whose account is in right standing and have no chargebacks.
Always remember to communicate with your credit card processor especially if you are expecting a big order or it is high season for your company. Let the processor know in advance as this will safeguard your account and ultimately your business. Even though you probably may still experience holds, you will be less likely to suffer dire consequences such as the termination or freezing of your account.
