Transaction processing scenarios

Various scenarios arise in transaction processing, each serving specific purposes to accommodate different needs and situations.

Each of these payment scenarios serves a unique purpose, offering flexibility, convenience, and error correction in the complex landscape of transaction processing. Understanding and implementing these scenarios appropriately, contribute to a smoother and more adaptable payment system.

In this guide we cover some common payment scenarios.

Deferred authorization

Deferred authorization involves obtaining approval for a transaction but delaying the actual capture of funds until a later time.

This scenario is common in industries where the final amount is not known at the time of authorization, such as hotels or rental car services.

Incremental authorization

In scenarios where the initially authorized amount is insufficient, incremental authorization allows merchants to request additional approval for an increased amount. This is often seen in situations where the final cost exceeds the originally approved amount.

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We dive deeper into incremental authorization here.

Partial approvals

Partial approvals occur when a cardholder has insufficient funds for the entire transaction amount.

In such cases, the issuer approves a partial amount, and the cardholder may need to provide an alternative payment method to cover the remaining balance.

Sample messages

You can view sample partial approval messages in Sample FAST messages and by navigating to a partial approval.

Pre-authorization

A pre-authorization is an authorization for an amount greater than zero that meets one or more of the following three conditions:

1. Authorization is requested for an estimated amount.
2. Additional (Incremental) preauthorizations may be requested.
3. Transaction may no longer be completed for reasons other than technical failure (such as telecommunications failure or terminal failure) or lack of full issuer approval. For example, the transaction might not be completed when the cardholder is offered the choice to complete the transaction with another payment means at a later time, such as, when checking out of a hotel or returning a rental car, or when the goods ordered by the cardholder might be later found to be out of stock.

Scenarios

The following scenarios are examples in which card acceptors can use a pre-authorization to benefit from its greater processing flexibility or from its more generous payment guarantee terms:

• A hotel wants to obtain a payment guarantee at check-in for the room rate, plus a provision for possible additional expenses related to the minibar or breakfast - the hotel uses a pre-authorization because it supports estimated amounts.
• Another hotel wants to obtain a payment guarantee at check-in for a hotel stay of 10 days - the hotel uses a pre-authorization because the associated payment guarantee is valid for up to 30 days and the clearing presentment will take longer than four business days.
• An airline wants to obtain a payment guarantee at flight-booking time for certain types of flights where the ticket may take several days to issue - the airline uses a pre-authorization because the associated payment guarantee is valid for up to 30 days and the clearing presentment may take longer than four business days.
• An e-commerce merchant wants to obtain a payment guarantee at order time, before it can confirm that the goods are actually available in stock - the merchant uses a pre-authorization because the transaction may still be canceled if the goods are later found to be out of stock.
• Another e-commerce merchant wants to obtain a payment guarantee at order time but the items ordered may take several days to ship - the merchant uses a pre-authorization because the associated payment guarantee is valid for up to 30 days and the clearing presentment may take longer than four business days.

Sample messages

You can view sample pre-authorization messages in Sample FAST messages and by navigating to a pre-authorization.

Refund transactions

A refund is a transaction type that returns funds to where they came from. For payment cards, a refund is typically performed when a purchased item is returned, and the funds (or some part thereof) are credited back to the cardholder.

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We dive deeper into refunds here.