Various services are involved in processing payments. These services enable customers to purchase goods and services. They also enable merchants to receive payments from customer accounts, to provide refunds, and to void transactions.

Authorization

An authorization confirms that a payment card account holds enough funds to pay for a purchase. Authorizations can be made online or offline.

Online Authorization

Online authorizations provide immediate confirmation of funds availability. The customer's financial institution also reduces the amount of credit available in the customer's account, setting aside the authorized funds for the merchant to capture at a later time. Authorizations for most payment cards are processed online. Typically, it is safe to start fulfilling the order when you receive an authorization confirmation.

An online authorization confirmation and the subsequent hold on funds expire after a specific length of time. Therefore it is important to capture funds in a timely manner. The issuing bank sets the expiration time interval, but most authorizations expire within 5 to 7 days.

The issuing bank does not inform when an authorization confirmation expires. By default, the authorization information for each transaction remains in the database for 180 days after the authorization date. To capture an authorization that expired with the issuing bank, you can resubmit the authorization request.

Offline Authorization

Online transactions require an internet connection. In situations where the internet is not available, for example, due to an outage, merchants can continue to take credit card payments using offline transactions. An offline authorization is an authorization request for which you do not receive an immediate confirmation about the availability of funds.

Offline authorizations have a higher level of risk than online transactions because they do not confirm funds availability or set aside the funds for later capture. Further, it can take up to 5 days to receive payment confirmations for offline transactions. To mitigate this risk, merchants might choose to fulfill orders only after receiving payment confirmation.

Payment Network Token Authorization

You can integrate authorizations with payment network tokens into your existing order management system. For an incremental authorization, you do not need to include any payment network tokenization fields in the authorization request because obtains the payment network tokenization information from the original authorization request.

Authorization Workflow

This image and description show the authorization workflow:

1. The customer purchases goods or services from the merchant using a payment card.
2. You send an authorization request over secure internet connection to . When the customer buys a digitally delivered product or service, you can request both the authorization and the capture at the same time. When the customer buys a physically fulfilled product, do not request the capture until you ship the product.
3. validates the order information then contacts your payment processor and requests authorization.
4. The processor sends the transaction to the payment card company, which routes it to the issuing bank for the customer's payment card. Some card companies, including Discover and American Express, act as their own issuing banks.
5. The issuing bank approves or declines the request.
   • If funds are available, the issuing bank reserves the amount of the authorization request and returns an authorization approval to .
   • If the issuing bank denies the request, it returns an authorization denial to .
6.   runs its own tests then tells you whether the authorization succeeded.

Authorization Reversal

The authorization reversal service releases the hold that an authorization placed on a customer's payment card funds.

Each card-issuing financial institution has its own rules for deciding whether an authorization reversal succeeds or fails. When a reversal fails, contact the card-issuing financial institution to learn whether there is a different way to reverse the authorization.

An authorization reversal is a follow-on transaction that uses the request ID returned from an authorization. The main purpose of a follow-on transaction is to link two transactions. The request ID links the follow-on transaction to the original transaction. The authorization request ID is used to look up the customer's billing and account information in the database. You are not required to include those fields in the full authorization reversal request. The original transaction and follow-on transaction are linked in the database and in the .

Capture

A capture is a follow-on transaction to an authorization. It is used to transfer the authorized funds from the customer's account to the merchant account. To link the authorization transaction to the capture transaction, you include a request ID in your capture request. This request ID is returned to you in the authorization response.

Captures are typically not performed in real time. They are placed in a batch file and sent to the processor, and the processor settles all of the captures at one time. In most cases, these batch files are sent and processed outside of the merchant's business hours. It usually takes 2 to 4 days for the acquiring financial institution to deposit the funds into the merchant account.

When fulfilling only part of a customer's order, do not capture the full amount of the authorization. Capture only the cost of the delivered items. When you deliver the remaining items, request a new authorization, and then capture the new authorization.

Capture Workflow

The capture workflow begins when you send a request for a capture.

1. The merchant sends a request for a capture to the gateway.
2. For online captures, validates the order information then sends an online capture to the payment processor. For offline captures, stores the capture request in a batch file and sends the batch file to the payment processor after midnight.
3. The processor validates the request and forwards it to the issuing bank.
4. The issuing bank transfers funds to the acquiring bank.

Refund

Refunds are payment refunds from a merchant to the cardholder after a cardholder pays for a product or service and that payment is captured by the merchant. When a refund request is successful, the issuer transfers funds from the merchant bank (acquirer) account to the customer's account. It typically takes 2 to 4 days for the acquirer to transfer funds from your merchant account.

There are two types of refunds: a follow-on refund that is linked to an original capture or sale, and a stand-alone credit that is not linked to an original capture or sale.

Follow-on Refund

Refunds, also known as follow-on refunds, use the capture request ID to link the refund to the original transaction. This request ID is returned during the capture request (also known as a settlement) and is used in all subsequent refunds associated with the original capture. The request ID links the transaction to the customer's billing and account information, so you are not required to include those fields in the refund request.

When you combine a request for a refund with a request for another service, such as the tax calculation service, you must provide the customer's billing and account information.

Unless otherwise specified, refunds must be requested within 180 days of a settlement. You can request multiple follow-on refunds against a single capture or sale transaction as long as the total amount does not exceed the original purchase amount. To perform multiple follow-on refunds, use the same request ID in each request.

Stand-Alone Credits

Stand-alone credits are not connected to an original transaction. Stand-alone credits do not have a time restriction, and they can be used to issue refunds more than 180 days after a transaction settlement.

Refund and Credit Workflow

This workflow applies to refunds and credits. It begins when you send a request for a refund or credit.

Refunds and credits do not happen in real time. All of the credit requests for a day are typically placed in a file and sent to the processor as a single batch transaction. In most cases, the batch transaction is settled overnight.

1. The merchant sends the refund or credit request to .
2. For online refunds and credits, validates the order information then sends the request to the payment processor. For offline refunds and credits, stores the request in a batch file and sends the batch file to the payment processor after midnight.
3. The processor validates the request and forwards it to the acquiring bank.
4. The acquiring bank transfers funds to the issuing bank.

Void

A void cancels a capture or credit request that you submitted to but has not already been submitted to your processor. Capture and credit requests are usually submitted to your processor once a day, so your window for successfully voiding a capture or credit request is small. A void request is declined when the capture or credit request has already been sent to the processor.

After a void is processed, you cannot credit or capture the funds. You must perform a new transaction to capture or credit the funds. Further, when you void a capture, a hold remains on the authorized funds. If you are not going to re-capture the authorization, and if your processor supports authorization reversal after void (ARAV), you should request an authorization reversal to release the hold on the unused funds.

A void uses the capture or credit request ID to link the transactions. The authorization request ID is used to look up the customer's billing and account information, so there is no need to include those fields in the void request. You cannot perform a follow-on credit against a capture that has been voided.