Credit Card Processing vs. Authorize and Capture

There’s more than one way to process a credit card, which may come as a surprise to some independent owners of mid to small-sized businesses that are used to using one method. The two approaches to accept credit cards are credit card processing and authorize and capture.

Authorize and capture allows merchants to run an authorization on customers’ cards to ensure that they have enough money in the bank to make the purchase and won’t be left empty handed later on. A great example of authorize and capture occurs at service stations. Drivers pull up, ask to fill up, hand over their card and assume their credit card is authorized when the tank is full.

But what happens if your car is serviced and your card is declined? Do you get free gas? Does the service station owner take your information if you don’t have enough cash to cover? Authorize and capture prevents this scenario from becoming a reality.

Before filling the fuel tank, service station attendants first insert the card and run a small transaction to make sure that your card will be authorized. If it’s declined, they lose a very small amount of money. If authorized, they continue filling the tank.

Some small businesses that are selling large amounts of product to a vendor may even pre-authorize a few hundred dollars. Small Mom ‘n’ Pop businesses can be especially susceptible to being burned by people that charge items only for the merchant to find out later that the bank won’t disperse the funds because they don’t exist. The bank may also impose a charge on a business for a declined transaction.

Small to mid-sized stores that offer delivery services, such as groceries and liquor stores, often pre-authorize and capture after taking a card number over the phone. It’s worth the effort so that the store doesn’t prepare a delivery and send it out only to find out when it’s too late that the customer’s card isn’t authorized. Major delivery networks such as Instacart and Amazon Fresh also preauthorize client information.

While authorize and capture may seem like the logical way to go, it isn’t always possible. If a customer at a service station asks for $20 of gas instead of a fill-up, the card must be processed for that $20, and there’s not a possibility to authorize and capture. This is why service station owners prefer fill-ups to exact dollar amounts.

Time is also a factor. In a busy store, authorize and capture can be timely and hold up the line. In order to keep business running smoothly, merchants may prefer credit card processing.

Those businesses with reliable credit card processing can still authorize and capture despite the time factor. Credit card readers provided by companies like NRS Pay can provide authorize and captures all at once, so that business continues to run at a quick pace while the store owner has the peace of mind that comes from authorize and capture.

National Retail Solutions (NRS) is the leading provider of POS systems nationwide for small to mid-sized, independently owned, busy bodegas, groceries, hardware stores, and alcohol and tobacco establishments. When integrated with NRS Pay credit card processing, the POS serves as an all-in-one checkout solution that helps store owners be more efficient, succeed and grow.

By Marko Georgiev