Authorization

Authorization in the payments industry is the critical, real-time process where a merchant's acquiring bank requests and receives approval from the cardholder's issuing bank to confirm the availability of sufficient funds or credit for a specific transaction amount, effectively reserving those funds for future settlement. This process, which typically takes less than two seconds, is a fundamental risk mitigation step that precedes the final clearing and settlement of a payment, ensuring the transaction is valid and the cardholder is able to pay.