Authorization Code

What is Authorization Code?

An authorization code is a unique alphanumeric string generated by an issuing bank to indicate that a transaction has been approved. It confirms that the customer has sufficient funds or credit available and that the card is valid at the time of the request.

This code is sent back to the merchant through the payment gateway as proof of approval. While it reserves the funds, it does not complete the actual transfer of money, which happens during settlement.

Why It Matters

• Provides immediate confirmation that a transaction can proceed

• Serves as a reference point for tracking and reconciling specific payments

• Reduces the risk of accepting fraudulent or declined cards

• Acts as a required component for the subsequent capture and settlement steps