Credit limit is the maximum negative balance that can be reached before the customer is charged or treated as a debtor.
In Parallels H-Sphere credit limit serves two purposes:
- cumulative: This is applicable only to credit cards. All setup, recurrent and usage fees are accrued until their cumulative amount reaches or exceeds the credit limit. Only then is this amount charged. This approach minimizes referrals to credit card processing centers.
- restrictive: This is pertinent to check payments and invalid/expired credit cards. When the negative balance exceeds the credit limit, the account owner is considered to run into debts and is blocked from buying any resources, paid or free. Except for this, the functionality of the debtor's account isn't affected, unless you configure the system to suspend debtors. Recurrent and usage fees will be still accrued, and the debt will grow with every new billing period.
Example: If you set the credit limit to $10, a user with a $0 balance purchasing $5 resource won't be charged, even though his balance will become -$5. This is also true of invalid credit card or check payments.
Further, if this user decides to buy another $10 worth of resources, he will get charged $15, and his balance will become zero. But in case of an invalid credit card or a check payment, this user won't be able to buy these extra $10 of resources, and his balance will remain -$5. If this is the case, and if his usage fee equals $20, at the end of the payment interval his debt will increase to ( $5 + $ 20 = ) $25.