Credit Card Transactions: Authorization & Settlement
Answer by Trent Fleming, BOL Guru BIO AND CONTACT INFO
Question: I understand that when an authorization is made for a credit card transaction the actual charge will not show up on the customer bills until the settlement has been submitted to match the authorization. What happens with the debit card (VISA or Mastercard) that has not been submitted for settlement until after the authorization? Does the fund/transaction actually hit the customer's bank account as soon as the authorization is done or does it wait until the settlement to match the authorization comes in?
Answer: The answer will be specific to how your debit card processor functions. I'd suggest you talk with them for the details. You may find that you have options in whether they place a firm hold on the funds or just a memo hold for the debit transaction.
First published on BankersOnline.com date 11/04/02
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