Auth Only (Authorization Only)

Authorization only (or “auth only”) means a merchant has initiated a transaction for little or no actual money. Why? Well, it’s a way for the seller to obtain authorization for a purchase that will be settled hours, days, or even weeks later.

The most common example of auth only use is the lodging industry. A hotel will seek authorization at guest check in or perhaps when the reservation is made. The pre auth ensures that the card is legitimate, but also allows the hotel to reserve a set amount.

The set amount will cover the actual room fees, but usually an additional amount will be reserved for incidental charges that may come up during the guest’s stay: parking fees, room service, and so on. Once the final bill is determined, the charges are adjusted and the transaction is settled.

Most authorization-only transactions have a time limitation. If the transaction can’t be settled before the authorization’s expiration, the reserved credit goes back on the cardholder’s account. That may make it hard for the seller to get paid