A Security Deposit is a sum of money held to cover potential damages or non-payment. In digital payments, this is often managed via a Pre-Authorization (Pre-Auth), where funds are held on a card rather than taking cash or a physical check.

FAQs:

  • Is a security deposit refunded?
    If taken as a Pre-Auth, the hold is simply released, so no refund transaction is needed. If taken as a charge, it must be actively refunded.
  • Can I use a credit card for a security deposit?
    Yes, this is the industry standard for rentals and hotels as it guarantees funds without actually taking the customer’s cash upfront.
  • What happens if damage occurs?
    The merchant “captures” the portion of the deposit needed to cover the costs and releases the rest.

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