What is an 'over limit fee'?

An over limit fee is a charge that catches most merchants unlucky enough to experience it by surprise. An over limit fee is imposed on a merchant when they process more than their declared processing volume in any individual monthly period.

Remember those processing volumes that you declared when completing your merchant service agreement? Whether they were complete guesses or not, those numbers are the limits to which your processing bank will allow you to process credit cards. If you process in excess of those limits the processing bank may impose an over limit fee.

Over limit fees are usually expressed as a percentage and are imposed on gross processing volume that is in excess of the declared processing limit. For example, if a merchant processes $15,000 in a monthly period and their declared processing limit is $10,000 they risk having an over limit fee imposed on $5,000. If the over limit fee on their merchant account is 3%, the over limit charge would be $150.

An over limit fee is not automatically charged and different processing banks have varying tolerances regarding when and if they will utilize an over limit fee. However, letting something like this fall to chance is never advised. You can avoid ever having to worry about an over limit fee by performing due-diligence. A couple of pointers would be to:

• Be aware of the declared processing limits on your merchant account.
  
• Keep an accurate tally of your credit and bankcard sales each month to avoid breaking your limit.
  
• If you feel that you will exceed your declared processing volume contact your merchant service representative as soon as possible to inquire about having your limit increased.