A preauthorization, or authorization hold, is a temporary hold on a customer\u2019s credit card until final settlement. In this B2B transaction scenario, such as for distributors and manufacturers, the customer buys an item online, for example via Woocommerce or Shopify; the customer does not save their card on file or use a saved card on file, in which case different rules apply. Compliance with credit card processing rules improves authorization approvals, mitigates risk and reduces merchant fees.<\/p>\n\n\n\n
On the merchant side for ecommerce sale described: request for authorization goes out and the issuer responds with an approval code if all goes well. By also using 3-D Secure<\/strong>, the merchant shifts fraud liability to the issuer, reduces chargeback risk and can potentially qualify for reduced merchant fees. An additional authorization is not required if the final settlement amount is not more than 15% of the original authorization.<\/strong> Note, this is based upon scenario described! However, depending on the card type, the qualified interchange rate may downgrade to the worst rate possible due to authorization and settlement mismatch; The same applies if the final settlement on the original authorization is less. <\/p>\n\n\n\n Some, but not all payment gateways and API’s have solutions to help merchants resolve the mismatch problem. <\/p>\n\n\n\n How can merchant maximize profits on this type of transaction? Here are some requirements:<\/p>\n\n\n\n Failure to meet all requirements can increase merchant fees more to an additional 1% or more of the transaction amount.<\/p>\n\n\n\n References: <\/p>\n\n\n\n Visa Product and Services Rules<\/a>, section 5.8.3.1<\/p>\n\n\n\n
settlement MCC must match. One authorization reversal is allowed.<\/li>