Understanding the difference between an authorization and a capture is crucial for effectively managing transactions with your Paymentsave card machine. Here’s a clear explanation of both processes:
What is Authorization?
An authorization is the initial step in a credit or debit card transaction. When a customer makes a purchase, the card machine sends a request to the card issuer to verify that the customer has sufficient funds or credit available. If the issuer approves the request, the amount is reserved on the customer’s account, but the funds are not yet transferred to the merchant. This process ensures that the customer has the ability to pay for the purchase, and it reduces the available balance on their account.
What is Capture?
A capture is the follow-up process where the authorized amount is transferred from the customer’s account to the merchant’s account. After the transaction is authorized, the merchant needs to submit a capture request to finalize the transaction. This can happen immediately after authorization for most purchases, or at a later time for certain transactions like hotel stays or car rentals. Once the capture is processed, the reserved funds are transferred to the merchant, completing the payment process.
Key Differences
- Timing: Authorization occurs at the time of the purchase to reserve funds, while capture takes place afterward to transfer the funds.
- Fund Movement: Authorization holds funds but does not move them, whereas capture completes the transfer of funds to the merchant.
- Transaction Completion: A transaction is not fully complete until the capture is processed. Authorization alone does not result in payment to the merchant.
Why It’s Important
Understanding the distinction between authorization and capture helps in managing your business’s cash flow and ensuring smooth transaction processing. It also allows for better handling of pre-authorized transactions, such as those in hospitality or car rental industries, where the final amount might differ from the initially authorized amount.
Conclusion
In summary, authorization and capture are two essential steps in the payment process. Authorization reserves funds on the customer’s account, while capture completes the transaction by transferring the funds to the merchant. Knowing the difference between these processes is vital for effective transaction management and ensuring your business operations run smoothly with Paymentsave.
