Manual Authorization , Capture and Recording How and When to Use it
Capture and authorization are just two of the elements that make up payment processing. Although an automated process is the most common choice however, there are times when it is necessary to use manually authorized authorization and capture.
What's at stake?
Getting paid.
You'll soon see, in certain types of transactions in sales, getting the payment from the client can be difficult. If you manage this properly, you'll assure that you get what you're due with minimal friction for the customer.
This article will help you decide if manual or automated authentication and recording is better for your online business as well as how you can use it. It is important to clarify the terms.
What are authorization and capture?
These two distinct events occur when a consumer makes an online purchase by using a credit or debit card. In most cases, they happen at the same time. However, they do not have to be but in some instances your role as a merchant may want to separate them in accordance with the specific use.
Authorization
Authorization takes place when the credit card processor contacts the cardholder's bank to confirm that they've got enough money to cover the fees owed and to confirm that the card is in active use.
At this point at this point, the funds are not yet transferred from the bank that the customer uses to the business, but they remain, at the very least intended for the purpose of that transfer.
Authorizations are only temporary. Typically, they expire in seven days which means no money changes into the hands of anyone if the process to capture isn't completed prior to the expiration.
Capture
Capture, also called the settlement of the transaction occurs when the payment is actually transferred between the customer's bank and the seller. The bank will instruct the processor of payments to take funds from the customer's bank and then transfer them to your account.
What are the places where authorization and capture fit in the process of payment?
In most cases, both events occur simultaneously at simultaneously, which is ideal for the majority of businesses. But for certain use cases, as you're about to see, it's important to break them down into separate instances.
Manual vs. automated authorization and capture
Prior to separating them, we should make sure you understand your choices.
When authorization and recording occur at the same time and are automated, both will be automatically.
However, if you'd like to divide the two instances, then you could create a manual capture procedure. In this case, you would have to go into the payment processor you use and then manually start the capture process. In the case of payments, you could enable this within the admin settings.
How can manual capture be helpful?
Let's take a look at some examples to show you when the manual capture method might be a smart strategy for your business.
Gas or petrol
Once you have filled your tank of gas The authorization process takes place before you have pumped all the fuel. The fuel company authorizes your card and then lets you pump but doesn't record the charges yet because it isn't aware of the amount of gasoline you'll need to purchase.
Hotels
For most hotel transactions, guests' card gets authorized before or during check-in, for an estimate of the amount due to the amount of time they've booked their hotel room. But the capture process usually is completed at check-out, after the amount actually owed to the guest is established.
Equipment rental businesses
Particularly with costly equipment, many companies credit the card of the client prior to providing the equipment to be rented. This ensures they can cover charges. A few businesses permit payment of the value of the product, not only the rental cost, in case it gets damaged or lost. Then, when the item is returned the amount that is paid is refunded.
Artisans
There are many artisans who do custom-designed work, and the costs vary from job to task. Most of the time, the cost to be charged will not be known until the work is completed, especially if labor charges are charged per the hour. Sometimes they may want to authorize and capture part of the charge up front before completing the remainder after the work has been completed.
By keeping these scenarios in mind, you are able to start to think of scenarios within your personal business in which the separation of authorization from capture might be required.
If you're just filling online orders for goods and then shipping them generally, there's no need to create a separate authorization or capture. If the final amount of payment isn't known prior to the time that the item is shipped at a later date it is possible to first authorize the payment, but not necessarily record it at the exact time.
Manual capture disadvantages
There are a few risks associated that come with using manually captured. We'll review some of the things to watch out for.
First, you can't capture more than the amount you've authorized. The only limit is the exact amount or lesser. Therefore, if you're unsure regarding the amount you'll be charged making the decision to authorize it upfront puts you at risk of overcharging. This means you'd need to create a second charge, or cancel the first one and then re-start the process using more money. Both options are unlikely to leave the customer satisfied.
Second, the authorization expires after seven days. In situations that have more time between the time of order placing and fulfillment, if you wait for payment to be processed until delivery of your order has been completed then you risk the possibility that the transaction will be denied. When that happens there is a chance that you'll end up having shipped the product but not able to get the funds.
You'll need get in touch with the client to start the process again.
This is why, unless you have sufficient reason to differentiate authorization from capture and understand the risks of doing so don't make the move.
Finally manually capturing is only possible with card payments, not applications or payment methods that are local like Venmo.
Improving the manual authorization process and capture of the payment process
Be aware that you are able to capture less than you authorize, but not more. If you're handling the process by hand, you'll need take care of this in the processing company.
Best practices for managing manually authorized authorization and recording
Here are a few key guidelines to keep in mind when you are using the manual procedure.
1. Use manual authorization only and capture without having a valid reason
This creates additional friction for your site, increases your burden, and could put your site at risk for one or more of the scenarios mentioned in the previous paragraphs. If you've got a valid justification to employ manually captured capture, you just need to stay up to date and you'll be safe.
2. More than you need to capture
Like we said, you may capture less or the same amount, but no over what you've authorized. Therefore, if the ultimate payment amount isn't known at the time of purchase, authorize a higher amount than what you anticipate you'll in charging.
3. Don't wait to terminate your authorization to cancel orders
If the customer cancels their purchase, don't let it sit for seven days before allowing the authorization to expire. You can cancel it right away.
4. Check your payments dashboard regularly
Particularly in high transaction companies, you don't want to miss capturing any payment if you're using the manual approach. Make sure you check your dashboard regularly. Manual authorization and capture is a requirement. You should incorporate this process into your routine.
Flexible payment options: designed to work with your online store
The main benefit is your ability to connect to the technologies most suitable for your store. When it comes to getting paid, more merchants than ever before are turning to Payments due to its simplicity of use as well as its versatility.
You can take payments from 18 different countries and take more than 135 currencies. Customers can use electronic wallets like Apple Pay which reduces friction and boosting conversions. Many merchants are able to conduct transactions anywhere using Apple Pay's Mobile App and card reader.
Payments is fully integrated into your store's dashboard, so you'll be able to control everything from one place. It's not necessary to swap tabs or log in and out of accounts. It's also built and backed by the team, and is backed by the highest level of assistance.