Authorization Hold
A temporary hold placed on a cardholder's funds pending final transaction capture.
What is Authorization Hold?
An authorization hold (also called a pre-authorization or auth-hold) is a temporary block on a portion of a cardholder's available credit. When a transaction is authorized, the issuing bank sets aside those funds, reducing the cardholder's available balance without actually transferring money. The hold remains until the transaction is captured (settled) or released. Hotels, gas stations, and car rentals commonly use authorization holds because the final amount isn't known at authorization time.
Why It Matters
Understanding authorization holds helps manage customer expectations and avoid issues. Holds that exceed the final charge, or holds that remain after cancelled transactions, create customer complaints. Industries using holds (hospitality, fuel, rentals) need clear communication with customers. From a merchant perspective, capturing transactions promptly releases holds and improves customer experience.
Related Terms
Batch Processing
Grouping multiple transactions together for simultaneous settlement at day's end.
Settlement Time
The time between processing a transaction and receiving funds in your bank account.
Credit Card Processing
The complete system for accepting, authorizing, and settling credit card payments.
Card-Present vs Card-Not-Present
Classification of transactions based on whether the physical card is used at the point of sale.
Frequently Asked Questions
Typically 1-7 days, depending on the merchant category and issuing bank. Some holds can last up to 30 days if not captured or explicitly released.
Some processors support explicit auth reversals. Otherwise, the hold drops off after the bank's hold period expires, which can frustrate customers.
Pay-at-pump authorizations often hold a standard amount ($100-$175) because the final amount isn't known until pumping is complete. The hold adjusts after settlement.
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