Authorization

Authorization is a critical step in the payment process where a merchant seeks verification from the customer's card issuer to confirm that the credit or debit card being used has sufficient funds available to cover the transaction amount. This verification ensures that the merchant can safely proceed with the transaction without the risk of insufficient funds.

Auth Only (Authorization Only): This refers to a specific type of transaction where a merchant obtains approval from the customer's card issuer to hold funds but does not immediately capture them. The merchant reserves the right to capture these funds at a later date, depending on when the goods or services are delivered or used. This is common in situations where the final purchase amount may not yet be known, such as hotel bookings or car rentals.

Authorization Amount: This is the amount submitted by a merchant to the customer's issuing bank for approval during a transaction. It is essentially the sum the bank agrees to hold from the customer's account, guaranteeing the merchant that the funds are available until the transaction is finalized or the authorization expires.

Authorization Code: This is a unique code issued by the card issuer to a merchant during a transaction as confirmation that the transaction has been approved. The code acts as proof that the transaction amount is reserved for the merchant pending completion of the sale.

Authorization Hold: This is a temporary freeze placed on a portion of the customer's credit limit or funds, ensuring that the merchant can later capture the transaction amount. Authorization holds are especially common in transactions where the total amount cannot be predetermined.

Authorization Request: This is a request sent by a merchant's payment gateway to the card issuer to validate the card details and check for sufficient funds. The issuer reviews the card's validity, available funds or credit, and any other restrictions set on the account before responding.

Authorization Response: This is the reply from the card issuer to an authorization request, indicating whether the transaction is approved, declined, or if further information is required (Call Center response).

Authorization retries: These involve attempts to authorize a transaction multiple times if the initial attempt fails. Retry strategies are implemented to improve the chances of transaction approval, often automated by payment systems to enhance authorization rates.

Authorized Transaction: This is a transaction that has been officially approved by the cardholder's issuing bank, confirming that funds are available and earmarked for capture by the merchant. Following authorization, the transaction moves to the clearing and settlement phase, where the funds are formally transferred.

Authorized Push Payment Fraud: A type of fraud that exploits the immediate nature of real-time payment systems, where the fraudster convinces someone to willingly but unknowingly send money to a fraudulent account. Because the funds are immediately available, the fraudster can quickly abscond with the stolen funds.

Collectively, these terms form the foundational components of secure and efficient financial transactions, ensuring that both merchants and customers are protected throughout the payment process.