Getting hit with a “transaction not permitted (amount/pos/mcc)” error is frustrating because of how non-descript it is.
This message appears when your card issuer blocks a purchase based on three key factors: the amount, the point of sale (POS), or the merchant category code (MCC). Let’s break it all down.
LESS DECLINES, MORE CONVERSIONS
Breaking Down the Error Message
The error message has three potential sources. Here’s what each of them mean so you can avoid declines in the future.
Amount Restrictions
The “amount” part of this error happens when a purchase exceeds certain limits. Card issuers set spending caps to protect against fraud and help customers manage their money. The transaction might get blocked if:
- The purchase amount is higher than the customer’s daily spending limit
- The customer reached their monthly transaction limit
- The amount exceeds what’s typical for the customer’s spending pattern
- The customer’s account doesn’t have enough available credit or funds
Gift cards and prepaid cards often have stricter amount limits than regular credit cards. These cards might block large purchases or limit how much you can spend per day.
Point of Sale (POS) Issues
The “POS” refers to where and how the cardholder makes the purchase. Different types of transactions carry different risk levels, so card issuers may block certain channels:
- Online transactions: Some cards block internet purchases to prevent fraud
- International purchases: Cross-border transactions often trigger security measures
- ATM withdrawals: Cash advance limits might be lower than purchase limits
- Phone or mail orders: These “card not present” transactions face more restrictions
The card settings might allow in-store purchases but block online shopping, or vice versa. Business cards often have different POS restrictions than personal cards.
Merchant Category Code (MCC) Restrictions
The MCC is a four-digit code that tells payment networks what type of business you have. Card issuers use these codes to block purchases from certain merchant types:
- High-risk industries: Gambling, adult content, and firearms often face restrictions
- Cash-like transactions: Gift card purchases and money transfers get blocked frequently
- Restricted categories: Some cards don’t allow purchases from pawn shops, check-cashing services, or cryptocurrency exchanges
Even legitimate businesses can have MCC issues if their code doesn’t match what they actually sell. A restaurant coded as a bar might face different restrictions.
OPEN A SECOND MERCHANT ACCOUNT
How Credit Card Transactions Work
Every transaction follows the same basic steps, whether it’s shopping online or swiping in a store.
Step 1: Customer Enters Payment Information
The process starts when the customer provides your card details. For in-store purchases, it’s with a swipe, insert, or tap. For online shopping, customers type in the card number, expiration date, and security code. Your payment gateway captures this information.
Step 2: Merchant Sends Transaction Request
Your gateway sends the payment information to your payment processor. This request includes card details, the purchase amount, and the merchant’s information (including their MCC code). The payment processor acts as a middleman between your business and the card networks.
Step 3: Payment Network Routes the Request
Major card networks like Visa, Mastercard, American Express, and Discover receive the transaction request. They check the MCC code and route the request to the card issuer (the bank that gave the customer their card).
Step 4: Card Issuer Makes the Decision
Your card issuer receives the transaction request and runs it through several checks:
- Available credit or funds: Do they have enough money for this purchase?
- Fraud detection: Does this transaction match their normal spending patterns?
- Account restrictions: Are there any blocks on their account?
- Amount limits: Does this purchase exceed their spending limits?
- MCC restrictions: Is this merchant type allowed on their card?
- POS restrictions: Is this type of transaction permitted?
Step 5: Approval or Decline Response
The card issuer sends back either an approval or decline message. Approved transactions get an authorization code. Declined transactions get an error message like “transaction not permitted (amount/pos/mcc).”
Step 6: Merchant Receives the Response
The payment processor sends the card issuer’s response back to you. Approved transactions let the cardholder complete their purchase. Declined transactions stop the sale and display an error message.
Step 7: Settlement Process
For approved transactions, the actual money transfer happens later through a process called settlement. You get paid usually within 1-3 business days. The customer’s card balance or bank account gets charged during this time.
FASTER, MORE SECURE PAYMENT PROCESSING
Other Common Decline Reasons
Payment declines happen for many reasons beyond amount, POS, and MCC restrictions. Here are other error messages you might encounter:
Insufficient Funds or Credit
This straightforward decline means the customer doesn’t have enough money available. Their account balance might be too low, or they’ve maxed out their credit limit. The cardholder should check their available balance before trying again.
Expired Card
Cards have expiration dates printed on the front. If they’re using an expired card, the transaction will get declined. They need to contact their card issuer for a replacement if their card has expired.
Invalid Card Information
Typos in your card number, expiration date, or security code will cause declines. You can avoid this by setting up a soft info check through your gateway. This checks the credit card information before submitting as a payment. You won’t pay a processing fee if the card is invalid.
Card Not Activated
New cards need activation before customers can use them. If they haven’t activated your card yet, all transactions will get declined. The cardholder needs to call the phone number on their card or visit their bank’s website to activate it.
Suspected Fraud
Banks monitor spending patterns and block transactions that seem unusual. Large purchases, transactions in new locations, or multiple rapid purchases might trigger fraud alerts. The card issuer might text or call the cardholder to verify these transactions.
Account Restrictions
The account might have holds or restrictions that prevent certain transactions. These could be temporary holds from previous transactions, security blocks due to reported fraud, or restrictions the cardholder set up themself.
Technical Issues
Sometimes declines happen because of technical problems with payment systems. Your payment terminal might not be working properly, or there could be communication issues between payment networks. These problems usually resolve quickly.
International Transaction Blocks
Many cards automatically block international transactions to prevent fraud. If the customer is traveling or shopping from foreign websites, they should contact their card issuer to let them know about their travel plans.
How to Fix Transaction Not Permitted Errors
When you encounter a “transaction not permitted (amount/pos/mcc)” error, follow these steps to resolve the issue:
Contact the Card Issuer
The customer needs to call the customer service number on the back of their card. They should explain that they received this specific error message and ask the service rep to identify which restriction caused the decline. The representative can say whether it was an amount, POS, or MCC issue.
Verify the Information
Make sure the customer entered all their card information correctly. They need to check their card number, expiration date, and security code. Even small typos can cause declines that look like restriction errors.
Try a Different Payment Method
If one card doesn’t work, they can try another card or payment method. Different cards have different restrictions, so a backup card might go through successfully.
Adjust Your Card Settings
Many banks let customers modify their card restrictions through online banking or mobile apps. They might be able to increase spending limits, enable international transactions, or allow purchases from specific merchant categories.
Make a Smaller Purchase
If the decline was due to amount restrictions, try splitting the purchase into smaller transactions. However, be aware that too many small transactions (especially of the same amount) might trigger fraud alerts.
Merchant Issues
Sometimes the problem is on your end. You might have incorrect MCC coding or technical issues with your payment processing. Verify your merchant category code and try processing the payment again.
Payment processing involves multiple parties – the card issuer, payment networks, and merchants all play a role.
Getting a “transaction not permitted (amount/pos/mcc)” error doesn’t mean there’s anything wrong with the card or account. These restrictions exist to protect customers from fraud and help them manage their spending. Understanding what causes these declines and how to address them makes the payment experience smoother and less frustrating.
FEWER DECLINES, BETTER PROCESSING
Frequently Asked Questions
What should I do if a transaction gets declined for amount/pos/mcc reasons?
First, ask the customer to contact their card issuer to understand the specific restriction causing the decline. They can explain whether it’s an amount limit, POS restriction, or MCC block. In many cases, they can adjust the card settings or temporarily lift restrictions to allow the transaction.
Can I prevent these declines from happening?
Yes, the customer can take several steps to avoid these errors:
- Set up account alerts to monitor their spending
- Contact their card issuer before making large purchases
- Use cards that allow the type of transaction they want to make
- Keep their contact information updated so their bank can reach them
Also, there are payment gateway plugins and settings you can use. Try checking the card details before submitting the transaction to avoid the decline. If something is wrong in the check, notify the customer of the error.
Why do some merchants get blocked by MCC restrictions?
Card issuers block certain merchant categories to reduce risk and comply with regulations. High-risk businesses like gambling sites, adult entertainment, and cryptocurrency exchanges face more restrictions. Some issuers also block cash-like transactions such as gift card purchases.
Will trying the transaction again work?
Usually not, unless something has changed. If the decline was due to amount, POS, or MCC restrictions, the same restrictions will still apply. However, if the decline was due to a temporary technical issue, trying again might work.
How long do MCC restrictions last?
MCC restrictions are typically permanent settings on the card. The card issuer would need to change the account settings to allow transactions from restricted merchant categories. Some restrictions might be temporary if they’re related to fraud prevention.
Can the customer use a different card to bypass these restrictions?
Different cards have different restrictions, so switching cards might work. Business cards, personal cards, and cards from different issuers often have different MCC and POS restrictions. However, amount restrictions might still apply based on your available credit or funds.
Do all card issuers have the same restrictions?
No, each card issuer sets their own policies. Some banks are more restrictive than others, especially regarding online transactions, international purchases, and certain merchant categories. Credit unions and smaller banks might have different policies than major national banks.
How can merchants avoid MCC-related declines?
Merchants should ensure they have the correct MCC code for their business type. Working with their payment processor to verify proper coding can reduce unnecessary declines. They should also be transparent about their business model to avoid confusion.
What’s the difference between hard and soft declines?
Hard declines are permanent rejections that won’t change if the transaction is tried again immediately. These include expired cards, invalid card numbers, and MCC restrictions. Soft declines are temporary issues like insufficient funds or technical problems that might resolve if the customer tries again later.
Can the customer set their own spending limits to avoid these declines?
Many card issuers let customers set their own spending limits through online banking or mobile apps. They can often adjust daily spending limits, transaction limits, and merchant category restrictions. This gives them more control over when and where their card works.
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