Authorization is the first step of every card payment: the merchant asks the cardholder’s issuer, in real time, whether the card is genuine and the funds are available. The issuer answers in seconds with an approval or a decline code. Approval places a hold on the cardholder’s available balance; the money itself only moves later, at capture and settlement.
Why it matters
The authorization rate, the share of attempts that come back approved, is one of the most honest health metrics a merchant has. High risk traffic routinely authorizes several points below mainstream retail, and every lost point is revenue that never existed. The gap between authorization and capture also carries rules of its own: holds expire, delayed capture suits preorders and reservations, and schemes fine merchants who authorize without a genuine intent to capture.