EAST POLL September to December 2021
Payment Card – Pre-Authorization
A pre-authorization (‘pre-auth’) is essentially a temporary hold placed by a merchant on a customer’s payment card, and reserves funds for a future payment transaction.
During the hold period, the funds are unavailable to you, the customer – you won’t be able to withdraw them from an ATM, or to spend them elsewhere. Although the funds cannot be accessed in your account, no money has been debited in the ‘pre-auth’, it is simply reserved. When the time comes to finalise a payment – for example, checking out of a hotel – the funds on hold can then be “captured”, meaning they are converted to a charge.
Hotels are one of the primary industries where ‘pre-auths’ are commonly used. ‘Pre-auth’ payments for hotels enable funds to be held either at the booking stage, or during check in. This helps to guarantee that, when it is time to check out, there are funds available to cover additional charges incurred during your stay. Room service, spa visits, or damage to the room, can be covered by these reserved funds. By placing a hold on extra funds, hotel managers can rest assured that you cannot leave without paying. When you check out of the hotel, the hold is converted into a charge. If you prefer to pay with a different card or payment method, the ‘pre-auth’ is cancelled and the funds on hold will be released within a few days.
A ‘pre-auth’ hold typically lasts about five days, though this depends on the Hotel’s MCC (merchant classification code). Some recent fraud situations have raised issues on valid hold periods. Since a ‘pre-auth’ hold denies access to funds, what do you consider a fair hold period?
Take the poll to express your view.
Your opinion counts; Through these research polls EAST regularly seeks to generate insight and opinion from members and non-members on a range of Payment and Terminal security and related issues.
Please check back regularly to share your views. Contact us if you would like to pass additional feedback to EAST on this topic. Past poll results are in the file below.