How does Pre-Auth work
Key Aspects of Pre-Authorizations:
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Temporary Hold: The pre-auth places a hold on the specified amount, ensuring funds are available for the upcoming transaction.
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Automatic Expiry: If the merchant does not complete (capture) the transaction within a certain period, the pre-authorization automatically expires, and the held funds are released back to the cardholder. This period can vary but is typically around 7 days.
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No Immediate Debit: The cardholder's account is not debited during the pre-authorization; the funds are merely reserved. The actual debit occurs when the transaction is completed.
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Customer Communication: It's essential to inform customers about pre-authorizations, especially regarding the temporary hold on funds and the expected duration before the hold is released.
Pre-Auth's are designed to secure funds for upcoming transactions, offering assurance to merchants while temporarily reducing the cardholder's available balance until the transaction is finalized or the hold expires.