Setting limits on transactions. Recommended or required for a processing company?

The Paradox of Limits: How Transaction Restrictions Secure and Stabilize Your Payment Business

Setting limits on transactions to be processed so that the business of the processing company could be successful does sound strange to third-party people. It would seem that the more transactions the payment service provider processes, the bigger the commission it will receive from the customers. And the limits seem to hinder the growth of the business of the payment company.

Nevertheless, the system of limits is part of the control over the transactions performed by the processing company and serves as an important means of maintaining stability and security of the business.

Usually, online merchants do not know it, but international payment systems (VISA, Mastercard and others) recommend payment service providers to limit the number of accepted payment transactions carried out using the same bank card through the same merchant account (i.e. online store or mobile application) within one day. These recommendations vary depending on the type of online business.

Some acquiring banks put forward such recommendations as mandatory conditions. As a result, they require that payment service providers should be able to set limits on their online payment acceptance and processing systems when working with bank cards.

Types of limits. Examples.

The introduction of limits on transactions does not always happen under the pressure from the acquiring bank. Processing companies are willing to use payment processing restrictions on their own initiative.

What features should payment software of a processing company have?

Among the most important features that a payments acceptance and processing system should have, are the following:

1. The ability to set restrictions for the online merchant and their stores by the type, number and amount of transactions allowed to receive.
2. The ability to permit processing based on transaction characteristics, along with the ability to send customized notifications to risk managers if necessary.

The adequate limits on the maximum number of refunds and chargebacks that an online store can relatively safely process during one day or one month, together with an appropriately configured notification system will help the payment service provider to immediately find out about possible problems in case the specified limits are exceeded, and to take measures to minimize their consequences as soon as possible.

A ban (or vice versa permission) to process a payment depending on one or several characteristics of its transaction allows you not only to create and manage the so-called “black” and “white” lists of buyers and customers of online merchants, but also to set up flexible scenarios, indicating to the processing system of the payment service provider which payment transactions are to be accepted or to be rejected.

Respectfully, eComCharge Team

eComCharge develops and delivers the PCI DSS Level 1 certified White Label Payment Platform beGateway for Payment Service Providers and Acquirers.