Authorization

Authorization
The process of authorization examines a cardholder's available credit limit or "line of credit" to make sure adequate funds are present to cover the current transaction. When a positive authorization occurs, the amount of funds needed to cover the transaction is set aside and that amount is also deducted from the available credit limit. The authorization is not a charge or a sale and merely represents an action on the part of the merchant to verify that your card has adequate funding for the transaction.

Three responses are possible when a transaction is presented for authorization. The most common is that the transaction is approved. It is also possible for the merchant to receive a "refer" response. In this instance the merchant is directed to contact the company for further instructions regarded the transaction. Finally, the transaction can be denied, usually because the amount would put the cardholder over their available credit limit.

In addition to the verifying the presence of adequate funds, authorization is also contingent on validation of the cardholder's account number, card expiration date, and accuracy of the name and address against the data on file.

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