Technical Terms

In the "Knowledge" section, we have compiled a glossary for you on the topics of risk and receivables management, e-commerce, payment and payment protection.

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    Payment authorization

Payment authorization

 What do we understand under payment authorization:

When a purchase is made and the payment method is transacted through cashless card-payments (e.g. credit card, debit card) a payment authorization follows. Before the goods are delivered to the consumers, the retailer receives a promise to pay authorization of the bank, since the outstanding amount is cleared to a later point of time.

Which benefits does a payment authorization offer:

Retailers cannot be certain that the card being used is authorized, sufficiently covered and has enough drawing limit that is why a payment authorization is necessary.

The card which is used during the payment process is checked in real time, also compared in blacklists. Audits are made in various points during the authorization process, validity of PINs, drawing limits deducting booked write-offs are examined. Further safety- and validity-checks additionally take place. When the validation process result negative, the payment will be declined.

The benefits of the payment authorization offers retailers and consumers a fast, cashless and safe payment process. The outstanding amount is authorized and the goods can be directly delivered. With it deferred complaints are reduced.

Where are payment authorizations carried out:

Payment authorizations are carried out wherever a card payment is made. Which can be carried out at a POS-Card terminal in stationary retail (POS), via MOTO (Mail Order Telephone Order) or in the checkout process of the payment gateway of an online retailer (E-POS).

Payment enquiries nowadays take place over the so called payment gateway. Which applies especially to online-retailers. Payment gateways are supplied through payment service providers. These bind various connectors, like banks, acquirer, credit agencies or payment provider on to the gateway. Also risk criteria policies and combinations can be regulated in the payment gateway, to provide a comfortable, fast and safe payment process.

Payment authorization with “purchase on account”:

These special features of payment authorizations are also possible for “purchase on account”, in which a retailer receives a guarantee of payment against payment defaults. A guarantee of payment for unsafe payment methods (e.g. “purchase on account”, “hire-purchase” or “direct withdrawal”) is provided by the payment service provider as in FlexiPay®. When the customer selects the payment method “purchase on account”, a credit assessment runs in real time. When the result of the credit assessment is good, FlexiPay® awards the retailer with a guarantee of payment. The guarantee of payment is at the same time the authorization for the retailer to deliver the ordered goods without taking any risks. When the customer has not made the payment, FlexiPay® buys the debt claim from the retailer in full, so that is liquidity is ensured.

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