Pre-Authorization

Pre-authorization separates the moment of cardholder commitment from the moment of final charge, which is necessary whenever the final transaction amount cannot be determined upfront.

Auth vs. Capture

Every card transaction involves two steps: authorization and capture (settlement). In a standard e-commerce checkout, these steps happen nearly simultaneously — the merchant authorizes and captures in a single flow. In pre-auth scenarios, authorization and capture are deliberately separated:

Authorization: The issuer verifies the card is valid, confirms funds are available, and places a temporary hold. The cardholder sees the hold on their statement but funds have not transferred.

Capture: The merchant submits the final transaction amount for settlement, which may be equal to, less than, or (in some cases with incremental auth) greater than the original hold. Funds transfer at this point.

Validity Windows

Pre-authorizations are not permanent. Card networks define maximum hold periods:

• Visa: 7 days for most merchants; 31 days for lodging and car rental
• Mastercard: 30 days for lodging; 7 days for most other categories

If a capture is not submitted within the validity window, the hold automatically releases and the authorization lapses. Merchants must either capture or re-authorize before the window expires.

Incremental Authorization

Hotels and car rental companies often use incremental authorization — extending or increasing the original pre-auth without requiring a new card interaction. This allows the final amount to exceed the original hold (e.g., adding minibar charges to a hotel stay) without re-engaging the cardholder. Incremental auth requires explicit support from both the acquirer and the card network program.

Operator Considerations

Merchants should monitor pre-auth to capture lag times and expiry rates. Uncaptured authorizations that lapse represent revenue at risk if the customer’s card status changes between auth and capture. For fuel and unattended retail, where final amounts are unknown, managing the hold amount (too high frustrates customers; too low risks insufficient funds) is a calibration problem that varies by average ticket size.