Authorization Hold

What is Authorization Hold?

An authorization hold is a temporary reduction of a customer’s available balance on a credit or debit card. It occurs when a merchant requests approval for a transaction, and the bank reserves the funds without immediately deducting them.

The hold ensures that the funds are available when the merchant eventually completes the transaction. If the transaction is not captured within a certain timeframe, the hold expires and the funds are released back to the customer.

Why It Matters

• Guarantees that funds will be available for the final payment amount

• Common in industries like hotels and car rentals where the final cost is unknown

• Prevents customers from overspending while a transaction is pending

• Reduces the likelihood of payment failures during the settlement process