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Credit Card Payment Processing

  • If you made a purchase attempt with your credit card but the payment failed or was declined, the funds may not be available for some period of time after the purchase attempt, even if your order was not successful.

    Here's a brief explanation of why this happens, how businesses process credit cards, and how you can release the funds.

    Credit card purchases are a two step process: Authorization of Funds and Capturing of Funds.

    Authorization of Funds
    Whenever you make a purchase attempt with a credit card, either online or in-person, the credit card company will make a temporary authorization for the funds, usually up to 7 business days, based on the amount of the purchase. This temporary authorizations locks the funds from being authorized and/or captured by another, separate transaction for the holding period. This lock is put in place to ensure any authorized purchase attempts do not exceed the credit maximum for your account. For example, if a credit card has a $5,000 credit limit and the card owner makes a purchase of $2,000, that amount is authorized by the credit card company and the card owner now may only make purchases totaling no more than $3,000 because the other $2,000 is on hold.

    Authorizations of Funds does not equate to a successful purchase! It simply means that the credit card company authorizes the funds to used toward a purchase. Each individual merchant is responsible for approving or denying a purchase based on their own risk assessment and capacity to accept payment.

    Capturing of Funds
    After a transaction is authorized by the credit card company, the merchant must capture the funds in order to receive them. Sometimes the capturing process happens right away. Sometimes, it takes several days for the merchant to capture. This is especially true for online retailers who accept credit card payments the moment you click the buy button, but do not capture the payments until they ship the products that were ordered. Once the funds are captured by the merchant, the transaction is complete, the authorization is released and the funds are transferred to the merchant.

    Releasing Funds
    In order to have the authorized funds released back to your card, you can either wait the 7 business days granted by your credit card company to expire, or you can contact the credit card company and request the authorized funds to be released immediately.

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