Understanding Preauthourization

Card preauthorization allows a merchant to preauthorize a specific amount to be paid by a customer. Once preauthorized successfully, a hold is put on the amount specified and left for the merchant to capture that amount at a later time or date.

Merchants can perform any of the following actions after preauthorizing:

  • Capture: This allows a merchant to capture or collect the preauthorized funds from the customer i.e. after value or service has been given to the customer a merchant would capture the preauthorized amount.

  • Void: This allows the merchant to release the hold on the funds i.e. if value was not given for the service, the merchant would typically be required to void the transaction

  • Refund: This allows the merchant to refund a captured amount.

Once an amount is preauthorized on a card and not captured within Seven (7) working days, the hold on the funds is automatically reversed.