What do activity limits refer to in card transactions?

Activity limits in card transactions specifically refer to the maximum transaction amounts or counts authorized against a card. This concept is crucial for managing risk and ensuring security in payment processing. Activity limits help to minimize potential losses due to fraud by restricting the amount a cardholder can spend or the number of transactions that can be made within a certain time frame, such as daily or monthly.

Establishing such limits protects both financial institutions and consumers, ensuring that spending remains within an authorized range and allowing for adequate monitoring of transactions. When the total of transactions reaches the established limit, any further transactions could be declined or require additional verification. This policy is particularly important in combating fraudulent activity, as it can quickly alert card issuers to unusual patterns of spending that may indicate a compromised card.