Pre-authorised payments: how they work and why businesses use them
October 30, 2025
12 min
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Sometimes you don’t want to take money straight away – you just need to make sure it’s there. That’s what pre-authorisation charges are for.
This guide explains what pre-authorisation means, how it works, where it helps, and how to implement it securely.
What does pre-authorisation mean?
Pre-authorisation (authorisation hold, pre-auth) is a two-step card transaction process where the issuer approves and reserves a specific amount on the customer’s account, confirming fund availability without moving money yet.
This approach answers a simple operational question: ‘Will this charge go through?’ — giving businesses confidence before delivering a product or service.
How do pre-authorisations work?
Here’s the process in short:
- Customer initiates a transaction. The customer provides their card details to book or secure a service.
- Authorisation request. The merchant’s system sends an authorisation request through the processor and acquiring bank, via the card network, to the issuing bank.
- Issuer review. The issuing bank checks card validity, available funds, and potential fraud risks. If approved, it reserves the requested amount, placing a temporary hold on the customer’s account.
- Hold placed. The customer sees this as a pending charge, but no money has been transferred. The funds are simply locked and unavailable for other use.
- Service completed. Once the service is delivered and the final amount is confirmed, the merchant either captures the funds (completing the charge) or releases the hold if no payment is needed.
- Hold expiry. If the merchant neither captures nor voids the pre-authorisation, it will eventually expire after a time limit set by the card issuer and network rules. The hold “drops off” and the funds become available to the cardholder again.
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How long do pre-authorisations last?
The duration of a pre-authorisation depends on the card network and merchant category. Typically, a pre-authorisation hold expires within 5-7 days. Industries like travel or rentals may apply longer holds (up to 30 days), especially if the service or final amount is uncertain.
In some cases, pre-authorisations may expire within hours once the transaction clears. This often happens with low-value or ‘micro’ authorisations, such as those used by fuel stations, online subscriptions, or digital wallets to verify that a card is active and has available funds.
Pre-authorised payments vs. immediate and recurring payments
Pre-authorised payments differ from other payment models mainly in timing and intent. Here’s a quick comparison:
| Type | Description | When captured | Common use cases |
|---|---|---|---|
| Pre-authorised payments | The merchant requests authorisation to hold a specific amount on the customer’s card without immediately taking the funds | Funds are captured later (usually after confirmation of goods/services) | Hotel bookings, car rentals, e-commerce pre-orders |
| Immediate payments | Funds are authorised and captured instantly in a single step | Immediately at checkout | Online purchases, digital goods, utility bills |
| Recurring payments | Scheduled or repeated payments that happen automatically after initial authorisation | Captured on a set schedule (e.g., monthly, yearly) | Subscriptions, memberships, SaaS, loan repayments |
The benefits of pre-authorised payments
Used correctly, pre-auths reduce risk, protect revenue, and improve operations. Let’s break that down.
For businesses
- Cost efficiency. Because no money is actually moved until the capture stage, you avoid gateway and interchange fees that usually apply to completed transactions. If a booking or order is cancelled, the pre-authorised amount can simply be released instead of refunded, meaning no double fees for refund processing or reversal.
- Guaranteed funds. Pre-auths confirm the customer has enough credit or funds before you deliver. It’s upfront protection against failed or declined payments.
- Prevent fraud and chargebacks. Since cards and funds are verified in advance, fraud attempts are easier to catch. Pre-auths also serve as a record of consent, reducing disputes or claims of unauthorised charges.
- Flexibility to adjust final charges. Unlike immediate payments, pre-auths are flexible. Capture the full amount, less than estimated, or more (with incremental authorisation). Great for situations like adding extras to an order or combining multiple purchases into one charge.
- Improve operations and forecasting. Fewer failed payments mean fewer manual re-attempts. Holds also give you visibility into expected revenue — helpful for forecasting and aligning with bookings or reservations.
For customers
- No immediate charge. Funds are only held, not taken, until the service or order is completed. If it’s cancelled, the hold simply disappears – no refund needed.
- Easy to change or cancel. Because no charge has gone through, customers can cancel plans within policy limits without waiting for money to return.
- Clear visibility. Holds appear as pending transactions, helping customers track spending and plan budgets. In some banks, they may instead show as small temporary charges or only affect the available balance.
- Protection from overcharging. Merchants can’t charge more than the pre-authorised amount without approval, ensuring customers only pay for what they receive.
- Peace of mind. Knowing the payment is reserved but not taken builds trust — customers feel safer booking or renting when they won’t be charged unless everything goes smoothly.
Potential risks and compliance considerations
Pre-authorised payments give merchants flexibility, but they also require careful handling. Here’s what to watch out for:
Expired or unclaimed holds
If a merchant forgets to capture or release a pre-authorisation charge within the allowed timeframe, the hold expires automatically. This can lead to failed captures or customer confusion when the final charge doesn’t go through. Businesses should track active authorisations and set up automated alerts to avoid missed settlements.
Customer frustration
From the customer’s perspective, a pre-authorisation can look like a charge. If they see a pending amount on their statement without understanding that it’s temporary, it can cause concern or support requests. Clear communication is key — merchants should explain that it’s only a hold, not a payment, and when it will be released or captured.
Capture errors or double charges
Capturing the same hold twice or trying to capture after expiry can cause duplicate charges. Payment systems should include safeguards like idempotency checks, clear logging, and automated expiry handling to prevent these errors.
Compliance with PSD2 and SCA
Under PSD2, Strong Customer Authentication (SCA) applies at the authorisation stage unless an exemption is valid. Make sure your setup meets SCA rules, or transactions may be declined.
Scheme and acquirer rules
Visa, Mastercard, and other card networks define strict rules for pre-authorisation timeframes, adjustments, and completion procedures. Merchants who don’t comply — for example, by capturing after expiry or failing to release holds promptly — risk disputes, fines, or chargebacks.
How to set up a secure pre-authorised payment system
Setting up and managing pre-authorisations it’s about designing a flow that’s reliable, compliant, and clear for both your team and your customers. Here’s how to do it right.
1. Identify when pre-authorisation makes sense
Start by mapping where in your customer journey pre-authorisation adds value. It’s ideal when you need to confirm funds before delivering a service or when the final cost isn’t known upfront — for example, rentals, marketplaces, or any order fulfilled later.
Avoid using it for fixed-price, instant purchases where an immediate payment is simpler.
2. Choose payment providers that support pre-auth flows
Not every payment processor or acquiring bank supports pre-authorised transactions and delayed capture. Check that your provider can:
- Separate authorisation and capture steps
- Support partial or multiple captures
- Handle reversals and expired holds automatically
The most popular PSPs that support pre-authorisations are Stripe, Adyen, Worldpay, and Braintree.
3. Set up your technical architecture
Design your system to manage the full pre-authorisation lifecycle. At a minimum, this includes:
- Setting up a default delayed-charge action (capture or void) and delay (hours or days), or passing these values when creating the transaction.
- Initiating pre-authorisation with flow=delayed_charge
- Storing the authorisation reference (transaction ID, PSP reference, or authorisation blob) for future capture or adjustment
- Supporting partial or full adjustment of the hold amount
- Capturing the final amount or cancelling the hold if needed
4. Implement webhook listeners
Set up secure webhook endpoints to receive real-time updates on authorisation events. These should cover key scenarios such as successful or failed authorisations, expiration warnings, adjustment confirmations, and capture completions. To protect your system and data, implement strong webhook security measures, including HTTPS endpoints, signature validation, retry logic for failed deliveries, and event logging for audit purposes.
5. Configure hold parameters
Set the appropriate hold duration based on your merchant category code (MCC) and operational needs. Standard pre-authorisations typically last 5-7 days, but certain industries can extend holds up to 30-31 days.
Also, define sensible minimum and maximum authorisation amounts. Monitor expiration windows so you can either capture or extend before expiry – expired holds can’t be captured, and funds return to the customer.
6. Add fraud prevention measures
Implement fraud checks specifically tailored to pre-authorisation. Use device fingerprinting to detect anomalies, velocity checks to flag unusually frequent transactions, and behavioural analytics to identify suspicious patterns. Maintain blocklists and allowlists to filter known bad actors.
Consider 3D Secure authentication for high-risk transactions to add an extra verification layer.
7. Build customer communication workflows
Transparent communication reduces confusion and chargebacks. Inform customers:
- That a hold is being placed and for how much
- How long the hold will last
- When the final charge will occur
- When unused funds will be released
Share this information during checkout, in confirmation emails, or verbally if applicable.
8. Settle and reconcile
Decide whether to use automatic capture with a configurable delay or manual capture that requires staff approval. Configure settlement intervals that align with your risk tolerance — 120 hours is a common benchmark that balances cash flow needs against chargeback exposure.
Also, build reconciliation workflows to track the gap between authorised and captured amounts, monitor expired authorisations, and manage partial captures or refunds.
9. Test before going live
Thoroughly test the entire flow — from initial authorisation to final capture. Validate adjustment scenarios, simulate authorisation expirations, and ensure your system handles failures and declines gracefully. Use a variety of card types and transaction amounts to verify card network and issuer compatibility.
Combining a payment orchestration platform with pre-authorisation-ready PSPs simplifies building and managing a reliable pre-auth setup. Instead of maintaining bespoke integrations and navigating each provider’s specific rules, the orchestrator introduces a unified control layer that handles differences in holds, adjustments, and expirations — cutting engineering effort and reducing risk.
Best practices for pre-authorisation payments
A well-orchestrated pre-authorisation flow combines technical precision, automation, and customer empathy. The best practices are:
Use dynamic routing for pre-auth-enabled PSPs
Some providers support multi-step authorisations natively, while others simulate the flow. To maximise approval rates and reliability:
- Route pre-auth requests dynamically to PSPs proven to handle them successfully. Use real-time performance data, card type, region, and issuer response patterns as routing parameters.
- Fallback smartly. If the preferred PSP fails to authorise, automatically cascade to another provider that supports pre-auth to avoid checkout disruption.
- Track decline patterns across acquirers — this helps optimise routing logic over time and ensures your pre-auth success rates don’t lag behind your standard payment flow.
Automate capture and void logic
Manual captures are prone to delays and human error, especially at scale. Automating this logic helps your team stay compliant and efficient.
- Set automated capture triggers based on business rules (e.g., fulfilment confirmation, time-based conditions, or service completion).
- Apply conditional voids when the order is cancelled or modified before capture. Automating voids prevents unnecessary settlement fees and improves operational accuracy.
- Monitor partial captures for flexibility — essential for businesses dealing with split shipments, variable tips, or deposit models.
Monitor pre-auth expiry and retries
Each pre-authorisation has a defined validity period, typically between 5 to 30 days depending on the card scheme or acquirer. Once expired, it can’t be captured — leading to lost revenue or customer frustration.
To avoid that:
- Set alerts and expiry dashboards within your payment system to flag upcoming expirations.
- Retry intelligently — if the capture window is closing, your orchestration logic can re-initiate a new pre-auth before expiry to maintain the hold.
- Audit PSP behaviour, as some automatically release funds earlier than others. Knowing this helps fine-tune timing and routing preferences.
Keep customers informed about holds and captures
Even the smoothest backend logic can’t offset poor user experience. Customers need clarity about when and why funds are held.
- Show clear, timely messages at checkout and in confirmation emails: “Your card has been authorised, and the amount will be captured after shipment.”
- Notify on release or capture with precise wording and context — avoid vague updates.
- Localise explanations where necessary; pre-authorisation norms vary across markets, so clarity builds trust globally.
Our role is to guide users clearly and effortlessly, ensuring they never feel stuck or stressed. And when challenges appear, quick support touchpoints — chatbots, live chat, or a well-placed FAQ — can make the difference between an abandoned cart and a successful transaction.
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Ihor Kostiuk
Product designer at Corefy
Key takeaways
- Pre-authorisation adds control and reduces risk. It lets you verify funds before charging, so you can deliver confidently without worrying about failed payments or refunds. This control helps reduce operational friction, chargebacks, and disputes.
- Operational discipline matters. Capturing or releasing holds on time keeps your cash flow predictable and your customers informed. Build clear internal workflows and use automated reminders to avoid expired holds and failed captures.
- Automation prevents errors. Automating capture, void, and expiry tracking ensures accuracy, speeds up settlement, and reduces manual work for your team.
- Payment orchestration simplifies the setup. It connects all your PSPs, acquirers, and payment methods under one system, centralising authorisation, capture, and reporting, while dynamic routing sends each transaction to the provider most likely to approve it. The result: higher success rates, lower costs, and fewer integration headaches.
- Done well, pre-authorisation pays off. When supported by automation, orchestration, and disciplined processes, pre-authorisation becomes a competitive advantage — improving efficiency and building customer trust.
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