What Is Authorization?

What Is Authorization (Provision)? How Deos It Work?

Authorization, also referred to as pre-authorization, plays an important role in the online payment industry. When a transaction is made using a payment method such as a debit or credit card, the temporary approval granted by the bank is called a provision (authorization). Authorization is the process by which the bank pre-approves a purchase to ensure that the transaction can be completed. It is done to secure the transaction and verify the validity of the card. In simpler terms, it means temporarily holding the purchase amount in the cardholder’s account.

How to Check Authorization?

Authorization status can typically be checked via the bank’s internet branch, mobile app, or customer service. Cardholders can monitor their authorization details for recent transactions using these channels.

How Is Authorization Processed?

The authorization process refers to the bank's approval of the transaction amount after a purchase is made. This transaction is completed electronically by the bank. If you’re wondering how authorization is processed, know that unless a refund or cancellation is involved, the system processes it automatically. In in-store POS transactions, you play a passive role, while for cancellations or refunds, you need to take active steps.

What Is a Pending Authorization?

Pending authorization means that the bank has approved a transaction, but the process has not yet been finalized. During this stage, the transaction amount is deducted from the cardholder’s available balance, but not yet transferred to the merchant. This mechanism helps protect both buyers and sellers from potential issues.

Can a Pending Authorization Be Canceled?

Yes, pending authorizations can be canceled. If a transaction is canceled or not completed, the bank automatically releases the authorization hold. The cancellation process may vary from bank to bank. To expedite it, you can contact your bank’s customer service directly.

What Is an Authorization Code?

The authorization code is a unique number generated by the bank for each authorization request. It is used to track and inquire about the details of a specific transaction.

What Is Pre-Authorization?

Pre-authorization is a temporary payment approval taken before the actual service date, especially in services like hotel reservations or car rentals. It allows the service provider to secure a guarantee from the customer.

What Is Open Authorization?

Open authorization refers to a transaction amount that has been approved by the bank but not yet processed, and remains blocked in the cardholder’s account for a specific period.

What Is Authorization via Mail Order?

Authorization via mail order is a process used in transactions made through telephone or mail orders. In this method, customers provide their card details verbally or in written form for manual processing.

What Is Pending Authorization for Virtual Cards?

Pending authorization on virtual cards is part of the transaction approval process in online purchases made using virtual cards. These cards are typically single-use or valid for a limited time period.

What Is Credit Card Authorization?

Credit card authorization refers to the process where the bank approves a transaction made using a credit card. This ensures that the seller is guaranteed payment.

What Is an Authorization Fee?

The authorization fee is a charge that may be applied by some banks for specific transactions, such as international payments or certain services. However, standard shopping transactions usually do not incur any authorization fees.