Credit card pre-authorization is a process where a temporary hold is placed on a specific amount on the customer's credit card. This is not a payment, but rather a reservation of funds to ensure the availability of the amount required. Here’s how it works and what you need to know:
Temporary Reservation:
- When a pre-authorization is performed, a certain amount is temporarily held on the customer’s credit card. This amount is often equivalent to one or two nights of booking in hotels or the expected charge for services like car rentals.
- The pre-authorized amount can be held for up to 30 days, ensuring that you will receive payment if the customer uses your services or goods.
Converting Pre-authorization to Payment:
- You can convert the pre-authorization into a payment if the customer does not show up, if there are additional charges, or if the agreed service is rendered.
- To complete the transaction, you need to use the pre-authorization code provided during the initial hold and enter the amount to be charged.
Cancelling Pre-authorization:
- If the payment is made in another way or if the reservation is no longer needed, you can cancel the pre-authorization.
- This can be done through the Pre-Authorization menu on your myPOS device by entering the pre-authorization code and selecting the cancel option.
Pre-authorization should not be used for charges related to loss, damage, or theft. For such charges, a separate transaction should be performed.
This functionality is especially useful for businesses that need to secure payment before providing services.