PreAuthorization

Preauthorization is a process that allows a merchant to verify that a customer has sufficient funds in their account to cover a transaction. It is commonly used in payment processing to reserve funds without actually deducting them from the customer's account immediately.

Key Features of PreAuthorization

• Communication with Card-Issuer: When a payment is preauthorized, the system communicates with the card-issuer through a payment gateway. This ensures that the customer's bank or financial institution is aware of the preauthorization request.
• Funds Reservation: The process reserves a specific amount of money in the customer's account, which means those funds are set aside and cannot be used for other transactions until the preauthorization is either committed or canceled.
• Transaction Completion: To finalize the preauthorization, one of two actions must be taken: either a PreAuthorize Commit to complete the transaction or a PreAuthorize Cancel to release the reserved funds.

PreAuthorize Commit

The PreAuthorize Commit transaction is the action that finalizes the preauthorization process. When a merchant decides to proceed with a preauthorized payment, they will send a request to commit the transaction.

Details of PreAuthorize Commit

• Transaction Finalization: This action commits the original transaction initiated by the PreAuthorize service, thereby completing the payment process.
• Fund Deduction: Upon committing the transaction, the reserved funds are deducted from the customer's account. This includes any applicable charges or fees associated with the transaction.

PreAuthorize Cancel

The PreAuthorize Cancel transaction is used when a merchant or customer decides not to proceed with the preauthorized payment. This action effectively cancels the preauthorization request and releases the reserved funds back to the customer.

Details of PreAuthorize Cancel

• Transaction Cancellation: This request cancels the original transaction that was done by the PreAuthorize service, meaning the customer will not be charged.
• Fund Return: The reserved funds are returned to the customer's account, allowing them to use that money for other transactions.