In order for a credit card transaction to be carried out, a request needs to be carried out before it can go through successfully. This is the basic premise of credit card authorization, which happens billions of times a day across the world. When you think about it, it is an incredibly clever process that allows consumers to buy goods in stores, online and via their mobile phones whenever it is convenient for them. As a business you should gain an in depth understanding of how credit card authorization services works so that you are prepared for every eventuality.
More About Credit Card Authorization
A credit card authorization is usually free from extra fees, however a small amount might need to be secured for a few days before it is returned to the relevant account. The process of credit card authorization allows the merchant and bank to check if a credit card is valid, if there are sufficient funds to support the purchase being made or even if the card has been stolen. In a case where the credit card is not authorized the purchase will be declined and the consumer will be notified at that time. Sometimes when the credit card is used in person and not authorized it can be kept by the merchant and given back to the issuer. This is usually in a case where the card has been reported as lost or stolen.
Successful Credit Card Authorization
When a transaction has been authorized, there is a permission hold place on the consumer’s account which equals the amount of the sale. Then a credit card authorization code will then be sent to the merchant so that they can approve the purchase. At this point the payment isn’t actually made; the authorization simply provides an acknowledgement that there are enough funds in the account to make the transaction possible. This process is almost instant and when the transaction happens online it is almost automatic once the authorization has been granted.
Credit Card Authorization Code
This is a code that is created from a handful of number by a banking society. This code is used to validate a credit card and approve the transaction as soon as a sale is made. Each code is completely unique for each transaction and they ensure that it is completely safe. A credit card authorization code helps to avoid fraud too. When a consumer uses a credit card to pay for a product or service the merchant will start by authorizing the card before the transaction takes place. The authorization code was created so that receipts don’t always need to be generated and paperwork can be reduced. The code still maintains an audit trail for the merchant, bank and customer, just in case they ever need to check their records.
Overall, it is important to understand the basics of credit card authorization so that you are aware of the ins and outs of the process for your business and day to day life.