What is the difference between authorize and authorize capture?
During the checkout process, your website sends customer information and instructions on what to do with it to your payment gateway in the form of a ‘request’. The two most common requests are Authorize and Authorize Capture.
Your gateway then acts on your request by communicating with your customer’s bank on your behalf. They try to determine if the card is valid and the requested funds are available. If all goes well, they request that the bank funds be held (so they are not available to anyone else) until the transaction can be fully processed. You’ve probably seen ‘pending’ transaction in an online account. Those are authorized/held funds. This happens regardless of which method you choose. If successful, your customer get’s a success message. If the bank rejects the request, your customer is ‘denied’.
Authorize Only Request:
Authorize and Capture Request:
Refund: The refund process is formal. If your account has already settled for the day, the capture has already occurred and you will need to request a refund. Typically you are charged transaction fees for a Refund request. If you have not settled your account for the day, you may send a Void request. Then the authorization is cancelled and the transfer of funds (capture) never occurs. Typically you are not charged transaction fees for Void requests.
Which way is better?
You should choose the best process for your business model. Some factors to consider are:
- Do you know the exact amount of the goods/services your are selling and they are immediately available to convey? Authorize and Capture.
- Do you need to add to the order after the sale (for example, calculate shipping costs or custom work that can’t be determined at the time of sale)? You may wish to Authorize an estimated amount to allow you access to those additional funds without having to make the customer go through another payment transaction.
- Do your customers pay in advance for something that might not happen? Authorize might work best for you. My reasoning is it typically does not cost you to cancel a transaction (void) if it was only authorized. But to refund previously captured funds does come at a cost. So if you are doing that a lot, it might be worth changing your process so that you have a window of opportunity to void a transaction instead of refunding money.
Are there other options?
Yes. If you have Customer Information Manager (CIM), you can create a customer profile with the customer’s card. Then you do not need to authorize or authorize capture funds at all. (Although I do recommend you run the profile creation request in ‘Live Mode’ which will test the validity of the card and run a test transaction.) Instead, you may request funds from a customer at a later date for any amount you choose without contacting the customer. I’ll write a post on this process soon. Until then you can read more on this option at Authorize.net.
Ready to implement CIM profiles on your website? Check out my CIM Profile and CIM Payment plugins.