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The “411” on Authorizations

What is an authorization and how does it work?

Once a six digit approval code is obtained it is authorizing that the funds are available and putting a “hold” on those funds. The money has not yet deposited in your account it is still tying up those funds for the cardholder.

What happens when the sale (authorization) is Voided?

When a transaction has not been batched/settled a void can be done to prevent the cardholder from getting charged. However, this does not immediately “release” the authorization or “hold” that was put on those funds. De-pending on the card issuing bank the authorization will expire in 3 to 5 business days and the “on-hold” amount will be-come available again.

My customer is using a debit card and the “hold” on the funds is interfering with their checking account balance. Is there a way to “release” the authorization quicker?

Some card issuing banks will drop the authorization and re-lease the funds back to the cardholders account if a letter is written. They typically want your company letterhead with details of the transaction and request to release the authori-zation, it is usually accepted by fax or e-mail. The contact information for the issuer is located on the back of the card.

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