Authorized Payments

Payments submitted using a credit card or PayPal Braintree payment method have the option to authorize a payment without automatically settling it by clearing the Mark for Settlement checkbox (refer to Create and Post Payment). If this checkbox is not selected when the payment is created, you can confirm and hold a customer’s funds without transferring the funds. The payment will have an Authorized status and will need an additional step to either transfer the funds by settling the authorized payment (refer to Settle Authorized Payment) or voiding the authorization (refer to Void Authorized Payment), which removes the hold on funds in the customer’s bank account.

A payment gateways securely communicate and initiate an exchange of funds between a merchant (your business) and customer bank accounts. After you initial a payment through a payment gateway, and before you receive the payment, the exchange of funds goes through the following two stages:

• Authorization — The payment gateway confirms that enough funds are in the cardholder’s account for the submitted payment and places a hold for the exact amount. When a payment is authorized but not settled, the cardholder may see a pending transaction in their bank account, which prevents them from spending the held money before the funds are exchanged.

• Settlement — The payment gateway initiates an exchange of funds for authorized payments that are marked for settlement, releasing the hold and transferring the funds from the cardholder’s account to your account. Typically, the settlement occurs overnight on business days.

 

 

 

 

Topic updated: 06/2024.