An authorization only transaction is a type of payment processing where a merchant requests authorization from the customer's issuing bank for a specified amount without immediately capturing the funds. This process allows the merchant to verify that the customer has sufficient credit or funds available while delaying the actual transfer of funds until a later date. Authorization only transactions are commonly used in scenarios where the final amount may vary, such as hotel reservations, car rentals, or certain service industries, providing flexibility for both merchants and customers.
Authorization only transactions are valuable in managing cash flow and ensuring customer satisfaction, particularly in industries with fluctuating final charges. In 2023, studies showed that approximately 30% of hotels utilize authorization only transactions to secure a customer's credit card for incidentals, providing assurance that funds are available while only capturing the final amount upon checkout. Example: A car rental company that uses authorization only transactions can confirm a customer's card is valid and secure a hold for a rental deposit without charging until the vehicle is picked up. Insight: Research indicates that merchants using authorization only transactions experience a 15% reduction in chargebacks related to disputes over insufficient funds, as the initial verification helps prevent failed transactions.
Swipesum provides tailored payment processing solutions that support authorization only transactions, ensuring your business can efficiently manage payment verification without immediate fund capture. Our team helps you integrate secure authorization processes that align with your operational needs, reducing the risk of chargebacks and enhancing customer trust. With Swipesum’s expertise, you can streamline your payment workflows, providing flexibility in transaction management while maintaining financial security.
