Card Authorizations or Pre-Authorizations
This is a temporary hold the bank places on your credit or debit card at the time of your purchase.
Completing a card transaction involves 2 steps:
- Authorizing the purchase.
- Settling the transaction.
The authorization process does not transfer funds from your account to the merchant, it is just the bank making sure that the funds for a purchase exist.
When an attempt at a purchase is made, you may see a pending charge on your bank statement. This is called an authorization hold.
Once the funds are settled to the merchant, the authorization hold will change to the actual amount paid.