Don’t Gamble With Your Cardholders’ Daily Limits

Article Contributor: Diana Kern / Client Learning Strategist

Transaction Authorization

Although a transaction authorization is completed within seconds, a lot goes on behind the scenes. SHAZAM’s process can include PIN validation, EMV chip validation, available balance checking, expiration date checking and a neural network analysis, among other things. Your core application or data center may also be involved in using a real-time connection to that system. Validating your cardholders’ available limits might be done by SHAZAM. Or the limits in our files might only be used during stand-in. No matter whose role it is to check the limits, setting them at reasonable amounts can help you control fraud losses when the transaction isn’t declined for any other reason.

What’s a Reasonable Limit?

Among SHAZAM clients, withdrawal and purchase limits aren’t one-size-fits-all. The average daily limit is between $800 – $1,500, but many factors will help determine what works best for you. That includes your cardholder demographics and their spending habits and patterns. The average size of a debit card transaction is less than $45. Even at a relatively moderate limit of $1,000 per day, a cardholder could perform 22 individual transactions! Cardholders make larger purchases, too. But are they a regular occurrence for all or related to one-time events? Assess your policies and procedures for limit increase exceptions. Do you have a good balance between protecting your organization from fraud losses and the operational effort required to support limit exceptions? Track the number of limit exceptions for 30 days or longer and use that data to find the right balance.

Limit Defaults

Some systems, including SHAZAM Access, offer default fields and settings for one or more types of limits. How those defaults work functionally depends on the system and your program settings at SHAZAM. More broadly, your organization probably has a set of default limits stated in your card issuing policies and procedures. Does the policy consider the variables in your products? In other words, are the defaults for an entry-level demand deposit account (DDA) and a premier DDA the same? Do your account opening procedures include a discussion with the accountholder about limits and expected card usage? You might be surprised when cardholders say your default exceeds their normal usage. Finally, set yourself a reminder to study your card limit policies, procedures and defaults regularly. It’s important to stay current as card usage and fraud trends change.