Authorization and Capture - SecurionPay Academy

Card Authorization and Capture

SecurionPay Academy

Don’t be like the most merchants and focus on a typical Sale transaction. This will not only raise your level of risk, but usually results in higher revenue loss. I’m going to demonstrate you how authorization and capture works and how you can stay safer and save lots of money.

card authorization and capture explained


Today, we’re going to be talking about how to improve your business and save you hundreds of dollars. You’ll learn about transaction types, mainly capture and authorization. I’m going to take a wild, wild guess here, but most of you are using this one phase transaction, which we call sales.

Sale (Charge)

So, what is a sale?
It’s literally a financial transaction. It’s when you authorize, verify and capture everything in one simultaneous go. I want to prove to you today why this is not the most effective way to go. This is why I’m introducing authorization and capture, it’s a two-phase approach.

Authorization and Capture

First, you authorize, you block the funds from the customer, you have time to verify and then you capture the funds. And in that capture phase, that’s when the financial transaction occurs.

So, let me show you how this looks like from the customers perspective.

We have a little customer here, they’re on your website, they want to buy a product or a service that you provide. They put in the card data —> they pay. Products are delivered, everyone’s happy and go on their way.

It looks a bit different from the merchants perspective, however. So, if they’re doing a one phase transaction or a sale, this is how it looks like: The customer is on the website, merchant then receives the payment request, the transaction goes through, the product’s delivered.

But, what can happen in this situation? Well, say the transaction goes through in a few seconds later, you get a fraud score saying that it’s fraud, right. You decide “Okay, I’m going to give a refund,” but that will cost you money and if it’s fraud, most likely in a few days you’ll get a chargeback. This one phase transaction gives you no time to verify, you’re also very vulnerable to chargeback, and there’s a cost of refund. So, what’s the brilliant solution to this problem?

This is how it works.
The merchant receives a payment request, authorization happens and funds are blocked on the customer’s bank account. Literally, there’s a blocked no money goes through. You then have a leeway, a time period to verify that customer — to review the fraud score: 7 days for debit cards, 25 days for credit cards. During this period, you can check — the funds are secured — no chargeback is possible only until after capture, and there’s a free refund in case you want to change your mind. In 95% of the cases, this is automated and last up to three minutes.

So, if you’re using our SecurionPay API, this is how it works.
The card is authorised, you then get a fraud score within a few seconds, it then decides for you — well, ‘If it’s 75 — nope, it’s fraud and I’m gonna give a refund, I don’t want to do anything with this customer.’ If it’s 50, you decide you take that manual decision. If it’s zero, it’s captured automatically.

Here’s a scenario also I’d like to illustrate. Say you’re offering a free trial for seven days. You authorize the payment, customer is testing your service for those seven days, the customer then decides: ‘I want to go with the product.’ Great, you capture the funds, then the financial transaction goes through. If it is not okay, well, you give them a refund at no cost as well.

Here’s the example.
You have 1000 transactions for $20 twenty. Thousand dollar income, right? Of course, there’s a transaction fee for this, so you multiply, do the math, $400 dollar transaction cost for this.

There is roughly a 1% chargeback ratio resulting in 10 chargebacks. 10 chargebacks plus the cost of the chargeback, $25, the money that you lose equals $450. Overall costs are $400 dollars plus $450 = $850, plus the time, energy, and resources spent on disputing that chargeback.

So, what do you do?
Well, you go with SecurionPay authorization and capture. This drops down your chargeback 60% to 4 from the initial 10, you do the math, equals $180 worth of cost, you say, $270. You go one step further and you do our Non-invasive 3D secure, that chargeback drops down even more to just one chargeback, resulting in $45 worth of cost, saving you a total of $405.

So, in conclusion, SecurionPay with their authorization and capture will not only improve your business, save you money, but keep you safe and secure.

Thank you so much for your time today!

Feel free to check out our website and our links to find out some more information. Leave us some feedback — we’ll get back to you as soon as we can.

Enjoy the rest of your day!

The following two tabs change content below.

Patrick Kozakiewicz

Chief Evangelist
Chief evangelist whose motivation is to make history. My philosophy is to convert people and link my goals into changing the world. I have experience and curiosity in technology, mindfulness and making business flourish.

Non-invasive 3D Secure

Card Transaction Types