What is an Authorization?

Card authorization is the consent granted by a credit or debit card issuer (typically a bank or credit union), indicating that the cardholder possesses enough funds or available credit to pay for the transaction they are completing with the card.

In a certain context, the phrase "card authorization" may denote the actual authorization, such as "We possess card authorization for this transaction". It may also refer to the procedure of obtaining payment authorization, as in, "We are currently in the process of card authorization."

Importance of Card Authorization

Fraud Prevention- By confirming the card's legitimacy and checking funds availability, card authorization aids in blocking fraudulent transactions.

Transaction Security- Authorization verifies that the customer possesses enough funds or credit to finalize the transaction, lowering the chances of disputes and chargebacks.

Compliance- For adherence to payment industry regulations and security standards like PCI DSS, card authorization is an essential requirement.

What does a card authorization hold mean?

A card authorization hold, or pre-authorization, is a temporary hold placed on a customer's available balance or credit limit before the final charge is processed. This approach is prevalent in sectors like-

• Hotels
• Vehicle rentals
• Fuel stations

The hold amount is generally greater than the actual transaction amount to accommodate possible extra fees. Once the final transaction amount is confirmed, the temporary hold is released and the actual charge is posted to the account.