This process is not instantaneous (although many believe it is). At this point, the funds are 'held' and deducted from the customer's credit limit (or bank balance, for a debit card), but are not yet transferred to the merchant.Īt the end of the day, the merchant instructs the credit card machine to submit the finalized transactions to the acquirer in a 'batch transfer.' This begins the settlement process in which the funds are transferred from the customer's accounts to the merchant's accounts. When a merchant swipes a customer's credit card, the credit card terminal connects to the merchant's acquirer, or credit card processor, who verifies that the customer's account is valid and that sufficient funds are available to cover the transaction cost.

For credit cards, holds can last as long as 30 days, depending on the issuing bank.

Double or pending charges on your bank account or credit card do not necessarily mean that you have been charged twice.Īuthorization hold (also called card authorization, preauthorization, or preauth) is the banking industry practice of authorizing electronic transactions made with a debit card or credit card, and holding the balance as unavailable either until the merchant clears the transaction (also called settlement), or the hold 'falls off' and makes the balance available again.įor debit cards, authorization holds can fall off the account from one to five days after the transaction date, depending on the bank's policy.

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