Every merchant account has limits that control how much money can be moved it. Your merchant account has four limits:
Limits can be adjusted as your requirements change over time.
- Per deposit transaction limit
- Per withdrawal transaction limit
- Monthly deposit limit
- Monthly withdrawal limit.
Why are there limits?
A landlord who collects $800/month in rent from a single unit doesn't need to collect $250,000 each month. If that happens, something else might be going on.
The limits on a merchant account minimize the amount of risk that you need to take on should a transaction be recalled.
Limits are a security precaution that protects the people involved in the EFT/eCheck transaction. The rules that govern EFT/eCheck transactions allow banks up to four business days to audit a transaction and many banks take full advantage of that time. If the money is deposited sooner, it could be withdrawn by the time the bank asks for the money back. Should that happen, you'll be responsible for returning the money. The limits help to keep those amounts manageable.
A per transaction limit controls the maximum amount of money that can be moved electronically at one time. For example, let's say you have to pay a vendor $1500. If your merchant account has a per withdrawal transaction limit of $1000, you would have split the payment into two parts - $1000 and $500.
A monthly limit controls the maximum amount of money that can be moved electronically over a calendar month. It should be large enough to assume that all of your residents pay online. The per transaction limit should be 2-3 times your largest resident payment, in case someone pays in advance.
Higher limits usually require more backup documentation for your merchant account. For example, a transaction limit of $5000 per transaction and a monthly limit of $100,000 per month usually require two years of financials.