--- title: Understanding Credit Card Authorization vs. Credit Card Pre-Authorization description: "Credit-card authorization and credit-card pre-authorization: how do they differ and which one can can save your business time and money?" image: https://blog.payjunction.com/hubfs/BLOG/FEATURED%20IMAGES/credit-card-authorization.svg --- [tel:1-800-601-0230](tel:1-800-601-0230) 800-601-0230 - Features - Solutions - Developers - [Pricing](https://www.payjunction.com/payments/pricing.html) - Resources [See a Demo](https://www2.payjunction.com/tour-payjunction) Features - EXPLORE PRODUCTS [No-code Payments Integration®](https://www.payjunction.com/payments/no-code-payments-integration.html) [ZeroTouch Terminal](https://www.payjunction.com/payments/smart-terminal.html) [Portable Terminal](https://www.payjunction.com/payments/portable-credit-card-reader-terminal.html) - ACCEPT PAYMENTS [Invoices](https://www.payjunction.com/payments/electronic-invoices.html) [ACH Electronic Checks](https://www.payjunction.com/payments/ach-payments.html) [SmartSurcharge®](https://www.payjunction.com/payments/smart-surcharge.html) [Cards on File](https://www.payjunction.com/payments/store-credit-card-info.html) [Rapid Refunds](https://www.payjunction.com/payments/credit-card-refund.html) [Recurring Billing](https://www.payjunction.com/payments/recurring-payments.html) [Ecommerce](https://www.payjunction.com/payments/ecommerce-merchant-services.html) [Mobile App](https://itunes.apple.com/us/app/payjunction/id1324839420?ls=1&mt=8) - EXPLORE CAPABILITIES [Overview](https://www.payjunction.com/payments/payment-processing-solutions.html) [Integration Marketplace](https://integrations.payjunction.com/) [Remote Signature](https://www.payjunction.com/payments/signature-capture.html) [Multi-Location](https://www.payjunction.com/payments/enterprise-payments.html) [Sales Reports](https://www.payjunction.com/payments/sales-reports.html) [Search and Export](https://www.payjunction.com/payments/transaction-history-search.html) [Customization](https://www.payjunction.com/payments/custom-payment-software.html) Solutions - [Veterinary Streamline payment workflows and get paid faster with up-front deposits and payment schedules for high-cost procedures. Get time back and spend it with furry patients.](https://www2.payjunction.com/payment-processing-veterinarians) - [Dental Simplify patient payments with multiple means of collection at your dental practice. Meet patient expectations and elevate the payment experience.](https://www2.payjunction.com/payment-processing-dentists) - [Auto Dealer Manage dealership payments by department, brand and location. Get automated reports for simplified end-of-day close and save on processing fees.](https://www2.payjunction.com/automotive-merchant-services) Developers - [API Documentation See how to embed omnichannel payment features into your software, using your choice of our intuitive integration methods.](https://developer.payjunction.com/) - [Developer Experience Explore the developer journey and learn how our full-service partnership model helps you maximize merchant payment adoption rates.](https://www.payjunction.com/payments/payment-api.html) - [No-code Payments Integration® Rapidly integrate payment acceptance features into any SaaS application in minutes using our easy-to-use Chrome browser extension.](https://www.payjunction.com/payments/no-code-payments-integration.html) - [Integration Marketplace Check out our growing marketplace of integrated solution partners that streamline payment acceptance and help businesses automate and scale.](https://integrations.payjunction.com/) [Pricing](https://www.payjunction.com/payments/pricing.html) Resources - [About Us Learn how our people-first culture at PayJunction helps us earn widespread recognition and awards.](https://www.payjunction.com/payments/about.html) - [Careers Join us in our pursuit to deliver exceptional experiences to customers and partners.](https://www2.payjunction.com/careers) - [Support Get helpful information about how to use features, troubleshoot problems and contact us.](https://support.payjunction.com/) - [Blog Gain useful insights into payment industry trends and PayJunction solutions.](https://blog.payjunction.com/) - [Guides Up your payment processing knowledge with our in-depth eBooks and White Papers.](https://guides.payjunction.com/) - [Tutorials Read articles and watch videos about how to use valuable features on the PayJunction platform.](https://blog.payjunction.com/topic/pj-university) # Understanding Credit Card Authorization vs. Credit Card Pre-Authorization ![Understanding Credit Card Authorization vs. Credit Card Pre-Authorization](https://blog.payjunction.com/hubfs/BLOG/FEATURED%20IMAGES/credit-card-authorization.svg) [![Picture of Ursula Librizzi](https://blog.payjunction.com/hs-fs/hubfs/Ursula_Librizzi.jpg?width=48&height=48&name=Ursula_Librizzi.jpg) Ursula Librizzi](https://blog.payjunction.com/author/ursula-librizzi) 2/28/2025 In the payment processing industry there is a lot of payment jargon used interchangeably, and sometimes done so incorrectly. As a business owner processing credit cards, it is important you know what these terms mean so you use them correctly if a customer asks. If you’ve landed on this blog, it’s because you’re trying to determine the difference between two industry terms: credit card authorization versus credit card pre-authorization. Let’s dive in. ## Understanding the Credit Card Authorization Process Typically every “successful” transaction gets an authorization, meaning it wasn’t declined. This is the card-issuing bank’s confirmation that there are funds available to complete the transaction, which will be accompanied by an [authorization code](https://support.payjunction.com/hc/en-us/articles/213388398-Full-List-of-Approval-Codes-and-Decline-Codes). Usually a declined transaction will not get an authorization code, but instead will get, yes you guessed it, a decline code. However, there are some exceptions to this. If a transaction declines due to [AVS, CVV](https://blog.payjunction.com/avs-cvv-benefits) or no match on ZIP code, the card-issuing bank will still authorize the transaction. Receiving a decline in these scenarios depends on how your [transaction settings](https://blog.payjunction.com/cvv-input-customization/) are configured. ## Payment Processing Demo Schedule 15 minutes with a payments expert Get a customized PayJunction product walk-through Understand requirements and pricing Determine your SAVINGS! GET DEMO NOW ## Credit Card Pre-Authorization Meaning and Impact Now that you have an understanding of credit card authorization, pre-authorization should be a bit easier to grasp. Pre-authorization is a way to test if a card “works.” This encompasses a few things: available funds, address match and whether the card is active. [The process of credit card pre-authorization](https://blog.payjunction.com/understanding-credit-card-authorization) is as follows: 1. A transaction is initiated and a credit card is inserted, swiped or keyed in. 2. A test transaction of $0 or $1 is charged. 3. The card is tested for funds and address match. 4. Depending on the pre-authorization success, the true transaction amount will either run or not. If the pre-authorization test is successful the true transaction amount will be charged, and if it fails, the transaction will not run. The test transaction of $0 or $1 will not actually be charged to the customer’s card, but it will show up in their activity. This line item will eventually drop off and won’t show up on the final statement. Credit card pre-authorization isn’t standard with every [merchant account](https://blog.payjunction.com/merchant-account?hsCtaTracking=18e1c2c9-714d-4f22-bbae-9d4b4529734f%7Cd8ce0631-0fea-45a4-8d5a-d964240a79d6) and not every Merchant Service Provider offers it. If it’s available, you should have the option to enable and disable this feature at your leisure. This service usually has a small, associated cost, but its benefits outweigh the minimal fees you’d pay to use it. ## The Benefits of Pre-Authorization Pre-authorization ultimately allows for you to have more successful credit card authorizations at your business and maintain a steady flow of funds. The number of [AVS declines](https://blog.payjunction.com/avs-mismatch-provider-versus-bank/) you might run into is decreased with pre-authorization, allowing your business to correct transactions before potentially tying up a large amount of the available funds or credit on your customer’s card. Customers also benefit from getting a real-time glimpse of their available funds. If you ran a $3,000 transaction that came back with an AVS decline, that lowers your customer’s available funds by $3,000 until the pending charge is cleared. Attempting a second time with the correct address information may result in another decline due to insufficient funds or credit limits, confusion for the customer when they view their statement or accidental disputes against your business. Whether pre-authorization is the best way to avoid declines depends on your provider and the types of transactions you’re taking. Speak with your [Merchant Service Provider](https://blog.payjunction.com/merchant-service-provider) to ensure your account is set up to optimize credit card authorizations and maintain [security](https://blog.payjunction.com/topic/security) for you and your customers. ## Best Practices for Businesses Using Pre-Authorization While pre-authorizations can benefit businesses and customers alike, implementing them effectively requires careful consideration. Here are some best practices: 1\. Choose the Right Merchant Service Provider Not all payment processors offer pre-authorization capabilities, and some may charge additional fees for using this feature. [Ensure your provider](https://blog.payjunction.com/merchant-service-provider) supports pre-authorization and aligns with your business needs. 2\. Clearly Communicate Pre-Authorization Holds to Customers Customers may be confused when they see a pending charge or hold on their account. To prevent disputes, proactively inform customers about the temporary hold, how long it will last, and when the funds will be released. 3\. Set Appropriate Pre-Authorization Windows Pre-authorizations expire after a certain period (typically 5 to 7 days, depending on the card issuer). If a transaction isn’t completed within this timeframe, the funds may be released, requiring a new authorization. Businesses should manage these timeframes carefully to avoid failed transactions. 4\. Avoid Excessive Holds on Customer Funds Placing unnecessarily high holds can frustrate customers and impact their available credit. Set reasonable pre-authorization amounts that align with potential final charges to maintain trust and avoid customer dissatisfaction. 5\. Monitor Pre-Authorized Transactions Regularly Keeping track of pre-authorized transactions ensures that they are either completed or released appropriately. Failing to complete authorizations can lead to unnecessary fund holds or lost revenue. 6\. Be Aware of Potential Processing Fees Some merchant accounts charge fees for pre-authorization transactions, particularly if they are not converted into final charges. Understanding your pricing structure can help you assess whether the benefits outweigh the costs. 7\. Optimize Pre-Authorization for Fraud Prevention Pre-authorizations can be an effective fraud prevention tool when combined with Address Verification Service (AVS) and CVV matching. Ensure that your pre-authorization settings are configured to flag suspicious transactions while minimizing false declines. By following these best practices, businesses can maximize the benefits of pre-authorization while maintaining smooth transactions and positive customer experiences. ## Ready to Learn More Credit Card Processing Best Practices? If you found this blog helpful and want to deepen your understanding of beneficial payment processing tools and best practices, dive deeper with our credit card processing guide. This free comprehensive guide was written by our payment experts to explain payment basics and help professionals make informed decisions about payment processing software.  ## Credit Card Processing: The Definitive Guide [READ ON](https://www2.payjunction.com/cs/c/?cta_guid=994827a7-9fad-45ac-9c6c-f4d593f869e3&signature=AAH58kGjXNbTa8YmgaGsDEiWxtRMsTjB8A&portal_id=635739&pageId=7441229295&placement_guid=eade1672-5f59-4fdb-821e-11972f3eff1f&click=df4a2a8b-6a59-427c-a395-561e0db7bf1c&redirect_url=APefjpFlJlspOeaeADQYPqt9CzwfZPIsYzZA-TbvLFE8IhwrdrVtPGctUK2RGF4NOatuLN5orrdF47m2jbYhRG6OPGF8wXtdUxqaWTdNeXzi3JmP5a2dV1rrnMhwxzwDaaklqPW_rybyEEE9Px6TkkBF4-v3RImkfQ&hsutk=&canon=https%3A%2F%2Fblog.payjunction.com%2Fcredit-card-authorization&ts=1748559481570) *Editors Note: This post was originally published in November 2019 and has been updated for comprehensiveness and accuracy.* [Security](https://blog.payjunction.com/topic/security) [Questions and Answers](https://blog.payjunction.com/topic/questions-and-answers) --- ##### [![Unlocking Financial Insights: The Reporting Tools Auto Dealerships Need](https://blog.payjunction.com/hubfs/The%20Reporting%20Tools%20Auto%20Dealerships%20Need.png) Unlocking Financial Insights: The Reporting Tools Auto Dealerships Need](https://blog.payjunction.com/unlocking-financial-insights-the-reporting-tools-auto-dealerships-need) ##### [![Manual Credit Card Processing: How to Charge a Credit Card Manually](https://blog.payjunction.com/hubfs/BLOG/FEATURED%20IMAGES/manual-card-processing.svg) Manual Credit Card Processing: How to Charge a Credit Card Manually](https://blog.payjunction.com/manual-card-processing) ###### About Author ![Picture of Ursula Librizzi](https://blog.payjunction.com/hs-fs/hubfs/Ursula_Librizzi.jpg?width=200&height=200&name=Ursula_Librizzi.jpg) ### Ursula Librizzi Ursula is the sales and marketing operations manager for PayJunction. She oversees daily marketing tasks and liaises between the sales and marketing departments. ###### Related Posts ## [![Understanding Credit Card Authorization](https://blog.payjunction.com/hubfs/BLOG/FEATURED%20IMAGES/understanding-credit-card-authorization.svg) Understanding Credit Card Authorization Cardholders ultimately give businesses credit card authorization to request funds from their accounts. Authorization requests start when cardholders key in, swipe or insert their debit or credit cards through traditional credit card readers or Virtual Terminals. After waiting three to 22 seconds, depending on the business’s card reader speed, the transaction will either be approved or declined.](https://blog.payjunction.com/understanding-credit-card-authorization) ## [![Why You Should Ditch Your Credit Card Processing Authorization Form](https://blog.payjunction.com/hubfs/BLOG/FEATURED%20IMAGES/credit-card-processing-authorization-form.svg) Why You Should Ditch Your Credit Card Processing Authorization Form If you’ve been in business for long (or have been a patron at an old-school establishment), you’re likely all too familiar with the dreaded credit card processing authorization form. We say “dreaded” because these forms pose a number of issues for business owners that range from cumbersome to dangerous.](https://blog.payjunction.com/credit-card-processing-authorization-form) ## [![Why You Shouldn’t Charge an Authorization Hold After 7 Days](https://blog.payjunction.com/hubfs/BLOG/FEATURED%20IMAGES/authorization-hold-credit-card.svg) Why You Shouldn’t Charge an Authorization Hold After 7 Days Not all businesses are the same. While some fulfill a transaction exchange at the moment of purchase, others may take days to provide the product or service purchased. In this case, a credit card authorization would ensure that the customer has the funds before you provide your end of the transaction.](https://blog.payjunction.com/authorization-hold-credit-card) ## Meet a Payment System You’ll Love - ###### FEATURES [No-code Payments Integration®](https://www.payjunction.com/payments/no-code-payments-integration.html) [ZeroTouch Terminal](https://www.payjunction.com/payments/smart-terminal.html) [Portable Terminal](https://www.payjunction.com/payments/portable-credit-card-reader-terminal.html) [Invoices](https://www.payjunction.com/payments/electronic-invoices.html) [ACH](https://www.payjunction.com/payments/ach-payments.html) [SmartSurcharge®](https://www.payjunction.com/payments/smart-surcharge.html) [Cards on File](https://www.payjunction.com/payments/store-credit-card-info.html) [Recurring Billing](https://www.payjunction.com/payments/recurring-payments.html) - [Ecommerce](https://www.payjunction.com/payments/ecommerce-merchant-services.html) [Customization](https://www.payjunction.com/payments/custom-payment-software.html) [Remote Signatures](https://www.payjunction.com/payments/signature-capture.html) [Rapid Refunds](https://www.payjunction.com/payments/credit-card-refund.html) [Multi-Location](https://www.payjunction.com/payments/enterprise-payments.html) [Sales Reports](https://www.payjunction.com/payments/sales-reports.html) [Search and Export](https://www.payjunction.com/payments/transaction-history-search.html) [Mobile App](https://itunes.apple.com/us/app/payjunction/id1324839420?ls=1&mt=8) - ###### BUSINESS SOLUTIONS [Auto Dealers](https://www2.payjunction.com/automotive-merchant-services) [Veterinary](https://www2.payjunction.com/payment-processing-veterinarians) [Dentistry](https://www2.payjunction.com/payment-processing-dentists) - ###### RESOURCES [Product Overview](https://www.payjunction.com/payments/payment-processing-solutions.html) [Integrations](https://integrations.payjunction.com/) [Blog](https://blog.payjunction.com/) [Guides](https://guides.payjunction.com/) [Support](https://support.payjunction.com/) [Service Status](https://status.payjunction.com/) [Tutorials](https://blog.payjunction.com/tag/pj-university/) [API](https://www.payjunction.com/payments/payment-api.html) - [Trust Center](https://trust.payjunction.com/) [Request a Demo](https://www2.payjunction.com/payjunction-demo) [Pricing](https://www.payjunction.com/payments/pricing.html) [About Us](https://www.payjunction.com/payments/about.html) [Careers *HIRING*](https://www2.payjunction.com/careers) [Press](https://media.payjunction.com/) - ###### RESOURCES [Integrations](https://integrations.payjunction.com/) [Guides](https://guides.payjunction.com/) [Tutorials](https://blog.payjunction.com/tag/pj-university/) [API](https://www.payjunction.com/payments/payment-api.html) [Request a Demo](https://www2.payjunction.com/payjunction-demo) [About Us](https://www.payjunction.com/payments/about.html) [Careers *HIRING*](https://www2.payjunction.com/careers) [Press](https://media.payjunction.com/) [Trust Center](https://trust.payjunction.com/) [Service Status](https://status.payjunction.com/) - ###### BUSINESS SOLUTIONS [Auto Dealers](https://www2.payjunction.com/automotive-merchant-services) [Veterinary](https://www2.payjunction.com/payment-processing-veterinarians) [Dentistry](https://www2.payjunction.com/payment-processing-dentists) ##### 800-601-0230 SIGN UP FOR OUR NEWSLETTER  Become a better advocate for your business. Get Email Updates GO Thank you for subscribing! PayJunction is a Level 1 PCI Compliant Provider. PayJunction is a registered ISO of PNC Bank, N.A., Pittsburgh, PA. © 2026 PayJunction. All rights reserved. [Privacy Policy](https://support.payjunction.com/hc/en-us/articles/211053648) and [Terms of Use](https://support.payjunction.com/hc/en-us/articles/211053628). ```json { "@context" : "http://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Ursula Librizzi" }, "dateModified" : "2025-05-29", "datePublished" : "2025-02-28", "description" : "Credit-card authorization and credit-card pre-authorization: how do they differ and which one can can save your business time and money?", "headline" : "Understanding Credit Card Authorization vs. Credit Card Pre-Authorization", "image" : { "@type" : "ImageObject", "url" : "https://cdn2.hubspot.net/hubfs/635739/BLOG/FEATURED%20IMAGES/credit-card-authorization.svg" }, "mainEntityOfPage" : "https://blog.payjunction.com/credit-card-authorization", "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://cdn2.hubspot.net/hubfs/635739/logo-400px.png" }, "name" : "PayJunction" } } ```