The "411" on Authorizations

What is an authorization and how does it work?

Once a six digit approval code is obtained it is authorizing that the funds are available and putting a “hold” on those funds. The money has not yet deposited in your account - it is still tying up those funds for the cardholder.

What happens when the sale (authorization) is Voided?

When a transaction has not been batched/settled a void can be done to prevent the cardholder from getting charged. However, this does not immediately “release” the authorization or “hold” that was put on those funds. Depending on the card issuing bank the authorization will expire in 3 to 5 business days and the “on-hold” amount will become available again.

My customer is using a debit card and the "hold" on the funds is interfering with their checking account balance. Is there a way to "release" the authorization quicker?

Some card issuing banks will drop the authorization and release the funds back to the cardholders account if a letter is written. They typically want your company letterhead with details of the transaction and request to release the authorization and is usually accepted by fax or e-mail. The contact information for the issuer is located on the back of the card.

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