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What is the difference between Authorization & Settlement?
There are two stages in a credit card transaction. - Authorization
Within seconds electronic contact is made with the cardholder's bank and an approval request is made for a dollar amount. The bank checks the account requested to ensure the money is available (and performs currency conversion if required) and, if so, sends an approval code back to the provider. If the transaction is declined for any reason, the reason for the decline is sent as well. Our systems then interpret the reason for decline and give a message back to the cardholder. If approved, the dollar amount is reserved under your merchant number and against the cardholder's line of credit. However, they technically haven't actually "paid for it" yet. - Settlement
Following internal fraud verifications, our provider captures the funds of all approved transactions. This step effectively moves the money from the cardholder's credit card to your account with our provider.
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