1. Field of the Invention
The present invention generally relates to systems and methods for processing credit card transactions, and, more particularly, to systems and methods for processing credit card transactions that exceed a credit limit associated with the credit card.
2. The Related Art
A credit card is a financial product that is most commonly represented by a plastic card-like member. Credit cards are generally issued by a bank and provide a mechanism by which an authorized cardholder purchases products (e.g., goods or services) without an immediate, direct exchange of cash. With each purchase, a cardholder thereby incurs debt which he or she may thereafter (i.e., upon receipt of a monthly or otherwise periodic statement) fully pay the outstanding balance. Alternatively, the cardholder may, as a matter of necessity or choice, defer at least a portion of the balance for later payment with accompanying interest or finance charges for the period during which payment of the outstanding debt is deferred.
The spending power (i.e., the total amount of funds available to the cardholder at any particular time for making purchases and the like) of a credit card is typically limited to a particular amount (the “credit limit”) predetermined by the issuer of the card. The size of the issuer-imposed credit limit is generally based on a number of nonexclusive factors, the most important of which are often the cardholder's earning capacity and credit history. When purchases are made or debts incurred with the credit card, the available portion of the credit limit is reduced by the purchase or debt amounts. In addition, interest and/or finance charges are also subtracted from the available portion of the credit limit on a periodic basis. The total debits on a credit card are referred to as the “outstanding balance,” while the remaining or available balance of the credit limit is typically called the “available balance” and reflects the dynamically adjusted current spending power of the credit card. The cardholder may increase the available balance, up to the credit limit, by paying to the issuer (or its representative) the entire outstanding balance or a fractional portion thereof.
Under most known credit card administration methods, the card issuer informs the cardholder of the credit limit associated with the credit card. In this way, the credit limit acts as a threshold above which the card issuer will not normally allow purchases by the cardholder. A cardholder may sometimes circumvent the credit limit by applying for a higher credit limit or by requesting and obtaining express authorization from the card issuer to make an emergency purchase above the credit limit. Both of these options are granted only at the discretion of the card issuer, generally on a case-by-case basis.
In a typical credit card administration scheme, transactions are approved via the interaction of a point-of-sale terminal and a central data processor. When a merchant attempts to debit a credit card account, the merchant's point-of-sale terminal sends an electronic message to the central data processor. The central data processor determines whether the potential transaction, if accepted, would cause the outstanding balance to exceed the credit limit. In other words, the central data processor determines whether the potential transaction is of a greater monetary value than the available balance. The central data processor also determines if the card issuer has placed some sort of hold or other block on further transactions. Additionally, the central data processor may also execute some anti-fraud algorithms to determine patterns of suspect buying behavior (e.g., those patterns indicating theft or fraud). If all of these tests are passed, then the central data processor may issue an approval to the point-of-sale terminal. The merchant then completes the transaction.
As mentioned above, the increases in the credit limit and the authorizations to exceed the credit limit typically require the cardholder to contact the card issuer to request an increased credit limit. Oftentimes, however, the cardholder does not realize that a credit limit increase is needed for a particular transaction or is simply unable to contact the card issuer prior to the transaction. Thus, there is a need for a process allowing a card issuer to review transactions that will exceed a credit limit to determine whether a transaction approval is warranted for a particular transaction. Moreover, there is a need for card issuers to make this determination at the time of he transaction.