Authorization hold

What is an authorization hold?

An authorization hold is a temporary reservation of funds on a customer's card or payment account.

It happens after a payment is authorized but before the funds are captured or finally released. The held amount reduces the customer's available balance, but the money has not yet been fully transferred to the merchant.

In simple terms, an authorization hold confirms that funds are available and keeps them reserved for a limited time.

How authorization holds work

When a merchant requests payment authorization, the issuer checks whether the customer has enough available funds or credit. If the request is approved, the issuer may place a hold on the authorized amount. After that, one of several things can happen:

• merchant captures the payment, and the held amount moves towards clearing and settlement;
• merchant cancels or voids the authorization, and the hold is released;
• authorization expires, and the hold is removed automatically;
• final captured amount is adjusted, for example after tips, deposits, or usage-based charges.

The length of an authorization hold depends on the card network, issuer, payment method, merchant category, transaction type, and provider setup.

Authorization hold examples

Authorization holds are common in industries where the final amount may not be known at the start of the transaction. Common examples include:

• hotels holding a deposit for possible extra charges;
• car rental companies reserving funds for security deposits;
• fuel stations placing a temporary hold before the final fuel amount is known;
• restaurants authorising an amount before a tip is added;
• e-commerce merchants authorizing payment before shipment;
• subscription or trial services checking whether a payment method is valid.

In these cases, the hold protects the merchant while the final payment amount or service outcome is confirmed.

When authorization holds are released

An authorization hold is released when the payment is captured, canceled, voided, or allowed to expire. Customers may still see the held amount as pending for some time after the merchant has canceled or adjusted the transaction. This usually depends on the issuer and card network rules, not only on the merchant or payment provider.

If the hold is not released quickly, the customer may temporarily have less available balance, even though the merchant has not received the funds.

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