Zero Floor Limits

Posted in Finance, Accounting and Economics Terms, Total Reads: 832

Definition: Zero Floor Limits

Zero floor limits is a terminology associated with the transactions done by using credit and debit cards. As the name signifies, floor limit is the minimum limit of the transaction above which proper authorization is required for the transaction to get completed. However, this floor limit may vary from store to store.

For Example: If a particular store in United States, has a floor limit of $50, then for any transaction of a customer below this amount would not require any authorization from the customer. However, as soon as the amount exceeds $50, means when the floor limit has been crossed, authorization is required by the merchant for the transaction to get processed till completion.

When this floor limit is zero, i.e. when for all transactions authorization is required, it is referred to as zero floor limit. This zero floor limit is mainly applied in case of various online transactions or various other transactions where the merchant or the seller does not have any physical access to the credit or the debit card used for payment. However, zero floor limits is also applicable at almost all point-of-sales provided for shopping, at various quick service restaurants and also at various other places where plastic money can be used for payment by customers. This concept of floor limit does not apply to various kinds of debit cards such as Visa Electron. These kinds of card require authorization from the user for every transaction. Hence, they also have zero floor limits in a way.

Hence, this concludes the definition of Zero Floor Limits along with its overview.


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