What is “Authorization” in the Payment Processing World?

With one swipe of a credit card, money transfers from consumers’ accounts to merchant accounts. As a consumer watches the touchscreen, it takes literally seconds for the “Waiting” display to finally flash “Approved” for any random transaction. Many times during credit card processing, however, consumers see the term “Authorization” in progress. This vague term actually encompasses a highly intricate set of processes that safely move money from one account to another.

Authentication

One of the simplest portions of the authorization process is authentication. After swiping the card, the information flows to the merchant’s financial account holder. The merchant accounts are verified and the consumer’s information is acknowledged. It swiftly moves to the next credit card processing step.

Validation And Routing

Credit card information moves from authentication to validation. The consumer’s credit card company performs several checks in a matter of seconds. Unusual transactions are typically stopped at this juncture, such as a $5,000 charge for a high-end stereo system. The card is looking for any fraudulent behavior on the part of the consumer. If the transaction is relatively normal for that particular account, the credit card company sends the information to the financial entity backing the card.

Verification

Once receiving the charge information, the credit card company verifies that there are enough funds in the account and quickly holds the money for payment. An authorization approval code is quickly sent out to the merchant. An “Approved” indicator flashes on the credit card terminal, allowing the transaction to be completed. The held money is eventually transferred to the merchant’s account in the matter of a day or two, depending on the card and bank.

Declined Cards

Authorization fails for two common reasons, including fraudulent behavior or insufficient funds. If a customer is on vacation, for example, and does not notify the bank, an authorization may be declined if the system believes that the card is stolen. Insufficient funds is another decline reason that must be sorted out before the transaction can successfully be completed. Merchants do not get an explanation of declined cards. It is up to the consumer to call the bank and verify the issue. They have the power to allow the authorization if consumers confirm their identity with sufficient funds in the account.

Credit card processing has an intricate web of steps to keep the merchant and consumer safe from fraud. The next time the authorization display remains lit for more than a few seconds, think about this complicated process and its effect on the modern world.

Leave a Reply

GET FREE QUOTE TODAY AND START SAVING


Testimonials

It took me a while to decide who I wanted to settle with to handle all of my credit card transactions because every company wants to make it sound like they're offering you the best rates. CreditCardProcessing.com was able compare and beat all of the other offers I received. They were also able to provide me the fairest price on my EMV-compliant terminal. My sales representative and the support team were there to assist every step of the way. Ultimately, I'm looking forward to a long term relationship with this company.

Roland Tran from the Hong Kong Kitchen

It is a pleasure dealing with these folks. Their pricing is fair, their statements are understandable and their employees are knowledgeable and friendly.

John MacMillian from the Great Lakes Baking Company

The service was very professional, my sales person (Steven B.) was very well versed in the product and most helpful in getting our company set up to accept credit cards via my cell phone. Their rates are some of the lowest on the market and their service is unparalleled. I will recommend them to anyone requiring a credit card processing service.

Michael Harper from Deluxe Auto Body

Jonathan C. is wonderful to work with. He is very helpful, accommodating and resolves any issue quickly. It is hard these days to find someone who gives great customer service, but I can say, Jonathan is the best! I would not hesitate to recommend him to any business owner and to assist you in helping to grow your business.

Linda Garner from Regali Da Forno

I called indecisive about getting a device, but speaking to your Sales Consultant completely settled me. He was very professional, knowledgeable and patiently walked me through the process. He always responded to my voicemails and answered all my questions. After I received my merchandise, he called following up to ensure that I had received it. Customer service I would say is 5 stars. Stellar! Thanks Credit Card Processing, I will definitely recommend you.

Sarah Morgan from Vision International Ministries
Call Us Today! (866) 837-0751

© 2016 CreditCardProcessing.com. All rights reserved. Privacy Policy
CREDITCARDPROCESSING.COM, LLC is a registered ISO of Wells Fargo Bank, N.A. Walnut Creek, CA

*Further terms and conditions may apply. Promotion contingent upon CreditCardProcessing.com's receipt of written competing offer(s).

**Certain restrictions may apply.

Promotional offers brought to you by CreditCardProcessing.com.

Call (866) 837-0751 for details.