AUTHORISATION

EFT transactions necessitate communication between number of parties. When a card is applied at a merchant or Automated teller machine   (ATM), the transaction is first routed to an acquirer, then throughout a number of networks to the issuer where the cardholder's account is detained.

A transaction may be approved offline by several of these entities through a stand-in agreement. Stand-in agreement may be used when a communication link is not existing, or merely to save communication time or cost. Stand-in is subject to the transaction amount being below agreed limits, known as floor limits. These restrictions are calculated based on the possibility of authorizing a transaction offline, and therefore differ between merchants and type of card. Offline transactions may be subject to additional security checks such as inspection the card number against a 'hot card' (stolen card) list, velocity checks (preventive the number of offline transactions permissible by a cardholder) and random online authorization.

previous to online approval was standard practice and credit cards were processed using physical vouchers, every merchant would consent a limit ("floor limit) with his bank above which he must telephone for an approval code. If this was not carried out and the transaction consequently was declined by the issuer ("bounced"), the merchant would not be permitted to a repayment.