When taking a credit card payment, especially on a website, this question often comes up. Especially if you're configuring a gateway, such as Authorize.net for the first time and plan on using it with your shopping cart. There are usually two and sometimes three different options to choose from. They are:
- Authorize and Capture
- Authorize Only
- Capture Only
Selecting the right one depends on your needs. We will outline the differences here.
Authorize and capture is the most commonly used and can be considered a one step, set it and forget it option. The customer's credit card is authorized for the amount of the sale and an approval code is generated for you, the merchant. Then during settlement (which is usually automatic with gateways such as Authorize.net) the funds are captured and the process of depositing them into your bank account begins. If you aren't sure what you need, this option will get you paid in the fewest steps possible.
Authorize only is used to obtain an approval code. This verifies that the customer's credit card has enough money to complete the transaction and the credit card company has approved the sale. You will not automatically get paid with this option. You must manually capture the transaction for payment to be completed. Authorize only is most commonly used in situations where the merchant wants to verify that the card is valid and the customer is likely to be good for the sale. Such scenarios include reservations and booking for events that happen more than 24 hours in the future, or store that do not want to charge until they ship the product. You should remember that most credit card processors do not allow authorizations to remain open indefinitely. Most expire in a few days or a week.
Capture only is the process of using a previously obtained authorization code to get paid or "capture" the funds. This is the process of requesting payment from the cardholder's bank. To complete a capture only, you must already have an authorization code.
If you are interested in signing up for an Authorize.net account or a merchant credit card processing account, or if you just want to know more, contact us here.