Many times when a customer uses a debit card or credit card, there are not enough funds in the account to pay for the full amount of the purchase. When this occurs, several options can happen. The transaction can be denied immediately at the point of sale, but this benefits neither the customer nor the merchant. Instead, most businesses with merchant accounts provide what is known as a partial authorization. The card issuer then provides authorization for the amount available in the account, which lets the merchant obtain payment for the remaining balance without losing a potential sale.
Credit card processing has been made much easier for merchants who work with payment providers that offer this service. Most major credit card companies offer this service to business owners, banking on the fact that it is beneficial to them and their customers. Most providers make this process very easy for businesses, which makes it much more likely the service will be used with customers. The biggest drawback to partial authorizations are that merchants run the risk of losing money on sales if close attention is not paid to receipts that are returned during a point of sale transaction. If there is an oversight during this process, the remaining payment may not be collected and money will be lost on the sale.
Sometimes when partial authorizations are given, the cardholder may not have the money needed to pay the remaining balance. In these instances, a partial authorization reversal is performed. This allows the funds that were to be used to pay for the transaction to be freed up once again, essentially starting the transaction from scratch. Once this is accomplished, the customer can then be able to come back later with an alternative form of payment.
Businesses that want to have the capability to perform partial authorizations must be sure they have merchant accounts that will support this. Most vendors will provide newer model terminals as upgrades, or will offer newer models at discounts to help their customers make the necessary upgrades. Most also offer training to business owners and employees for free, allowing upgrades to be even easier.
While not having enough money for a purchase can be embarrassing to customers, businesses that can offer partial authorizations can make credit card processing easier for everyone. By having fewer declined transactions, both merchants and customers can find themselves in a win-win situation.