Authorisation and Capture
Authorisation and capture are the two steps of a card payment: authorisation, in which the issuer approves the transaction and holds the amount against the cardholder's balance, and capture, in which the merchant confirms the amount to take and submits it for clearing. They can happen together or days apart, which lets a merchant confirm stock before charging, adjust the amount at check-out, or take a deposit never captured.
- Also known as
- Auth and capture, Two-step payment, Pre-authorisation and capture
- Used at
- every card transaction; the split is standard in e-commerce (authorise at order, capture at shipment), hotels and car rental (authorise a deposit, capture the final bill), fuel (authorise an estimate, capture the fill), and marketplaces (authorise at order, capture when the seller confirms)
- Binding
- the schemes' rules on how long an authorisation may stand before capture (typically 7 days for most merchants, up to 30 for hotels and rentals; longer holds must be re-authorised), on capturing for amounts different from the authorisation (permitted within limits and categories), and on the fees for authorisations never captured (the schemes charge for "misuse")
- Typical timing
- authorisation in under a second; capture at the merchant's choice within the window; clearing and settlement after capture
- Typical effect on the cardholder
- the authorised amount reduces the available balance at once ("pending"); if never captured, the hold falls away when it expires — days later, to the cardholder's irritation
- Parties
- the merchant (which authorises and captures), the acquirer and network (which carry both), the issuer (which approves and holds), and the cardholder whose balance shows the hold
How authorisation and capture work in practice
A customer orders a €200 item online. The merchant's checkout authorises €200: the issuer approves, places a hold, and the customer's available balance drops. The merchant has a promise, not money; it has not been charged and no clearing record exists. Two days later the warehouse ships; the merchant captures €200, the transaction clears that night and settles the day after. Had the item been out of stock, the merchant would have voided the authorisation and the hold would have lifted — no refund needed, because nothing was taken. Had the customer added an item before shipment, the merchant would have captured more within the scheme's tolerance, or authorised again.
The split is what makes the flows of modern commerce work: a hotel holds €500 at check-in and captures the €380 bill at check-out; a car rental holds a deposit for the rental period and re-authorises if it runs long; a marketplace holds at order and captures only when the seller has shipped, so a cancelled order costs nobody a refund. It also creates the operational rules: authorisations left uncaptured expire, and a merchant that authorises and forgets pays the schemes' misuse fees and annoys cardholders whose money is frozen.
For payments engineers "auth and capture" is the basic API shape; for a finance team it explains why yesterday's orders are not yet revenue in the settlement file.
Example
A furniture retailer authorises at order and captures at dispatch, with a median gap of nine days. Its acquirer's report shows 4% of authorisations expiring uncaptured (out-of-stock orders nobody voided — customers' money held for a week for nothing), 2% of captures failing because the seven-day window had passed and the authorisation was gone (the retailer then re-authorises, and 15% of those decline), and €9,000 a year of scheme misuse fees. The fix: void on stock-out at once; re-authorise at day six for orders not yet dispatched; capture partial shipments as they go. Expired holds fall to 0.3%, failed captures to near zero, and complaints about "pending charges" from the customer-service log by two-thirds.
Common mistakes
- Authorising and never voiding, so out-of-stock orders freeze customers' money for a week. - Capturing outside the scheme's window and losing the authorisation. - Capturing for more than the authorisation permits, and being declined at clearing. - Treating an authorisation as revenue in the books. - Confusing a void (cancel before capture) with a refund (return after capture); one costs nothing, the other costs fees and days.