Authorization is the process where a payment processor contacts the issuing bank to verify that a customer’s credit card is valid and has sufficient funds to cover a specific transaction amount. When authorized, the funds are reserved (held) but not yet transferred to the merchant until the transaction is “captured.”
FAQs:
- What is the difference between authorization and capture?
Authorization reserves the money; capture actually moves the money. If you don’t capture an authorization, the hold eventually expires. - Does an authorization show up on the customer’s statement?
It usually appears as a “Pending” transaction. - Can an authorization be declined?
Yes, if there are insufficient funds, the card is reported lost/stolen, or the bank suspects fraud.
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