Manual Authorization , Capture and Recording What and when to use it

The capture and authorization process are the two main components of payment processing. And while an automated approach is usually the preferred choice but sometimes it's needed to make use of the manual method of authorization and capture.

What's going on?

Getting paid.

You'll soon discover, for certain kinds of sales transactions, getting the payment from the client can be difficult. Managing this process properly can make sure you're in a position to be paid what you owe and reduce friction for your customers.

This guide will assist you to determine whether automated or manual authentication and recording is better for your online business, and how to use it. We'll begin by defining these terms.

What are authorization and capture?

The two events that are distinct take place whenever a customer makes an online purchase by using a credit or debit card. Most of the time both occur at the simultaneously. But they don't have to, and in some situations, you as the merchant may want to separate them according to the purpose.

Authorization

Authorization takes place when the credit card processor contacts the bank that holds the card to verify that they have sufficient funds to pay for the charges owed, and that the card is in active use.

In the moment at this point, the funds are not yet transferred from the bank that the customer uses to the business, but they are, in essence, reserved for that purpose.

Authorizations are temporary. Most often, they expire within seven days, which means no money changes in the event that the capture process isn't completed prior to the expiration.

Capture

Capture, also called the settlement of the transaction occurs when the payment actually transfers between the customer's bank as well as the retailer. Your bank instructs the processor of payments to take money from the bank of the client and transfer them to your account.

What are the places where authorization and capture are located in the payment process?

In most cases, both processes happen at the same simultaneously, which is ideal for most firms. However, for specific use-cases such as the one you're about discover, it's essential to break them down into separate instances.

Manual against. Automated authorization, capture and

When we begin to look at how to separate them, we should make sure that you know what you're doing.

When authorization and recording occur simultaneously, they'll always be automated.

However, if you'd like to divide the two instances, then you could automatize the process of capture. In that situation, you'll need to log into the payment processor you use and then manually start the process of capture. If you want to enable payments, activate this feature in the administrator settings.

What are the best times to use manual capture?

We'll look at a few scenarios to show you when the manual capture method might be a smart strategy to your company.

Fuel or gasoline

If you are filling your tank of gas The authorization process takes place prior to the pumping of the gas. The fuel provider will then authorize your credit card, and permits you to pump but doesn't record the transactions yet since it doesn't know how much gas you will buy.

Hotels

For most hotel transactions, the guest's credit card is authorized prior to or during check-in, for an estimated amount based on the number of days they've booked the room. The capture procedure usually occurs at the time of checkout, and the amount actually owed to the guest is established.

Equipment rental businesses

In the case of expensive equipment, most companies will charge the customer's credit card prior to they give them the device to rent. It ensures that they will be able to cover charges. A few businesses permit payment of what is actually worth of the item, not just the rental fee to cover the event that it is damaged or stolen. Then, when the item is returned, the exact amount to be to be charged is recorded.

Artisans

A lot of artisans perform custom work and their rates vary from job job. Most of the time, the amount to be charged isn't established until the job is done, especially when labor charges are charged per an hour. It is possible to authorise and take a part of the cost upfront in order to complete all the remaining work after it is completed.

By keeping these scenarios to think about, you could begin to imagine scenarios in your business where the separation of authorization from capture might be required.

If you're filling out online orders for products before shipping them out generally, there's no need to make a distinction between authorization and capture. But any time 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 however, you don't have to record it at the same time.

Manual capture disadvantages

There are some risks when using manual capture. We'll review some of the things to be aware of.

In the first place, you aren't able to capture more than the amount you've authorized. The only limit is the same or less. If you're not certain about the final price by approving the charge upfront, it puts you at risk of undercharging. Therefore, you'll need to either make a second charge, or cancel the first one and restart the process with more money. Both options are unlikely to leave the customer satisfied.

The authorization then expires after seven days. So, in situations with more time between placing an order and completion, if you do not wait to capture payment until the delivery of your order has been completed, you run the risk of the transfer being declined. In that situation it is possible that you will end up being able to ship the item but unable to collect the payment.

You'll need call the customer in order for a new payment procedure once more.

So it is not recommended to do so unless there's a good reason to separate the authorization and capture, and are aware of the dangers of doing this, you shouldn't do it.

Lastly, manual capture is only possible with payment cards. It is not possible to capture mobile payment options or applications like Venmo.

Enhancing the manual authorization process and capture of Payments

Remember, you can capture the amount you have authorized and not take more. If you're handling the process manually, you'll have take care of this in your payment processor.

Best practices for managing manual authorization and capture

Here are some key tips to remember when using the manual method.

1. Don't use manual authorization and capture without justification.

This adds friction to the site, which increases burden, and could put you at risk of certain scenarios as described previously. If you have a good reason to use manually captured capture, you just need to stay up to date and you'll be safe.

2. Authorize more than you might have to collect

In the above paragraph, you are able to capture less or the same amount, but no more than you authorize. So if the final amount of payment is not known at the moment of purchase, you can authorize a higher amount than what you anticipate you'll up charging.

3. Don't wait to terminate authorization of canceled orders

If the customer cancels their order, don't wait seven days to allow the authorization to expire. It is best to cancel the order immediately.

4. Check your payments dashboard regularly

In particular, in businesses with higher transactions, you don't want to be unable to capture any payment when you're employing the manual approach. Therefore, you must check your dashboard frequently. Manual authorization and capture, you have to integrate this procedure into your daily routine.

Payouts: flexible and streamlined for your store

The main benefit is your ability to integrate with the systems which best suit your business. When it comes time to get the money they deserve, more businesses have embraced payments due to its ease in use and its flexibility.

It is possible to make payments from 18 different countries and take over 135 different currencies. Customers can use electronic wallets like Apple Pay to reduce the amount of friction while also increasing conversion. And many merchants can conduct transactions anywhere using the Mobile App and card reader.

Payments seamlessly integrates into your store's dashboard, so it is possible to manage all of your accounts in the same place. No more swapping tabs and log in and out of accounts. It's also built and supported by our team, and includes priority assistance.