Technical
Authorization
Definition
Authorization the process of requesting approval for a card transaction from the issuing bank. The authorization request includes card details, amount, and merchant information. The issuer checks available credit/funds, fraud rules, and account status before responding with an approval or decline. Authorization is the first step - funds are reserved but not transferred until capture.
Related Terms
Capture
The process of finalizing a previously authorized transaction for settlement. Capture confirms the transaction amount and initiates fund transfer. Must occur within the authorization validity period (typically 7-30 days depending on MCC). Some merchants auto-capture immediately; others delay until fulfillment. Pre-auth + delayed capture is common for hotels, car rentals, and advance bookings.
Decline
An authorization request rejected by the issuer or processor. Decline codes indicate the reason: insufficient funds, suspected fraud, expired card, do not honor, etc. Not all declines are permanent - 'soft declines' may succeed on retry. Understanding decline reasons helps optimize approval rates. High decline rates hurt conversion and may trigger acquirer concerns.
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