Also called: Approval, Authorization code, Credit Card Authorization Code, Payment authorization
What authorization is
Authorization is the issuer’s response to a request to approve a card payment. The request travels from your business through your processor and the card network to the issuer. The issuer checks the card and account, available funds or credit, and transaction details before approving or declining.
An approval is not a completed payment. The issuer places an authorization hold on the customer’s available balance or credit, reserving the approved amount for your transaction. You still need to capture the payment. Settlement, when funds move through the payment system to your business, happens later.
An approval reserves the customer’s funds. Capture is the step that moves the payment toward your business.
How authorization works
For a $100 sale, an approved authorization reserves $100 on the customer’s account. It does not put $100 in your bank account. If you do not capture the payment, the hold must be released, and the customer may see the pending amount until the issuer removes it.
When you know the final amount in advance, you request authorization for that amount. For a hotel stay, rental, or other purchase where the final total is not yet known, Visa’s rules allow an estimated authorization. It must be a genuine estimate, not an arbitrary buffer or an amount that includes a tip or damage deposit. Tell the customer the estimate is not final and that further authorizations may occur.
Approval is not a completed payment
| Sale amount | $100 (illustrative) |
|---|---|
| Approved | $100 held |
| Captured | $100 submitted for settlement |
The example illustrates the difference between an authorization hold and a captured payment. Settlement happens later.
Why timing and reversals matter
As of 2026, Visa sets maximum processing timeframes for estimated authorizations: 30 days for lodging, vehicle rental, and cruise line merchants; 10 days for rental merchant categories and cardholder-initiated card-absent transactions; and 5 days for card-present transactions. An incremental authorization does not extend those timeframes.
If the final amount is lower than the estimate, reverse the excess. Visa requires excess funds to be reversed within 24 hours of completing the transaction. If the sale will not be completed, reverse the full authorization within 24 hours of learning that, or by the end of the authorization validity period. A lingering or duplicated hold can prompt customer complaints and disputes.
Where authorization shows up
Your processing records should let you match an approved authorization to its capture, clearing record, or reversal. Keep the transaction identifiers and use the correct transaction type so the messages match. An unmatched authorization can leave a customer-facing hold without a completed sale.
On a cardholder’s online account, an estimated authorization can appear as a pending amount before the final charge. On your processing statement, look for named fees such as “Misuse of Authorization System Fee” or “Unmatched Clearing fee.” Compare these fees with your authorization, clearing, and reversal records to identify approvals that were never matched or clearing records without a corresponding approval.
What authorization means for your costs
Authorization itself is not a fee paid to your business, and the research does not establish a standard authorization fee amount. Standard processing fees apply, while your acquirer sets the cost of estimated and incremental authorizations. Visa also assesses a Misuse of Authorization System Fee on approved or partially approved authorizations that do not match clearing or a reversal; the fee amount is not stated in Visa’s merchant guidance.
The practical cost is a sale that is approved but never captured, or an avoidable unmatched fee. Accurate transaction coding, prompt reversals, and matching each approval to the final payment reduce those errors.
What you can actually change
- Use a real estimate. For an estimated authorization, base the amount on the expected purchase. Tell the customer it is not final and that additional authorizations may follow.
- Match each payment. Reconcile approvals against captures, clearing records, and reversals. Keep the transaction identifiers so unmatched activity is easier to find.
- Reverse promptly. Reverse excess funds within 24 hours of completing the transaction. If the sale will not happen, reverse the authorization within Visa’s stated timeframe.
- Review fee lines. Look for “Misuse of Authorization System Fee” and “Unmatched Clearing fee.” Compare each charge with your transaction records to find missing reversals or mismatched messages.
Frequently asked questions
Does an authorization mean the customer has been charged?
No. An approval places a temporary hold on the customer’s available funds or credit. You must capture the transaction before it moves toward settlement and funds reach your business.
How long does a card authorization last?
There is no single timeframe for every transaction. As of 2026, Visa’s maximum processing timeframes for estimated authorizations include 5 days for card-present transactions, 10 days for cardholder-initiated card-absent transactions, and 30 days for lodging, vehicle rental, and cruise line merchants.
What is an authorization code?
An authorization code is a response value associated with an approved card transaction. It is not the payment itself: an approval still needs to be captured, and the transaction must then proceed through clearing and settlement.
Can an authorization hold be higher than the final charge?
An estimated authorization can differ from the final amount, but it must be a genuine estimate. If the estimate exceeds the completed purchase, Visa requires the excess to be reversed within 24 hours of completion.