What does credit card authorization mean?
A request that is carried out in order to ensure that a credit card is approved when being used for a purchase transaction. A credit card authorization is free from fees, although a nominal amount may be secured for two to three banking days and then returned to the account.
A credit card authorization can check to see if a credit card is valid, if it is stolen, or if there are insufficient funds in the account to cover the purchase. When a credit card is not authorized you will not be able to go ahead with the purchase. When the credit card is physically present and is not authorized under some circumstances it will be kept by the merchant and returned to the issuer.
If the transaction is authorized an authorization hold is placed on the customer’s credit account for the amount of the sale. A credit card authorization code is sent to the merchant to inform them that the transaction is approved. The actual payment is not made at this stage, with the authorization simply acting as an acknowledgement that sufficient funds are available for the transaction. This process is nearly instantaneous, and in the case of online purchases the transfer of the funds happens automatically after the authorization is produced.