What is the difference between authorization and capture?
Authorization is the issuer’s real-time approval of a card payment, which places a hold on the cardholder’s funds. Capture is the merchant’s later request to charge the final amount, which sends the transaction to clearing and settlement. Until capture, no money moves, and the hold can still be released. After capture, the merchant is paid through settlement and payout.
In detail
Authorization and capture are the two steps of a card payment. Authorization asks whether the card can pay; capture tells the issuer to collect the money.
Authorization
The merchant’s PSP sends a request through the acquirer and the card scheme to the issuer. The issuer checks the card, the risk and the available funds, then approves or declines in seconds. An approval places a hold on the cardholder’s account, but no money moves.
Capture
The merchant confirms the final amount, which can be equal to or lower than the authorized amount. Captured transactions are grouped in a batch, sent for clearing, then settled to the acquirer and funded to the merchant.
When they are separated
- Physical goods: capture at shipment.
- Rentals and hotels: capture the final bill after use.
- Digital goods and shops: both steps usually happen at once.
The type of authorization, final or estimated, also decides how long the merchant can wait before capturing. Read Authorization vs Capture and settlement and payout.