Pre-authorization

A pre-authorization, sometimes called a pre-auth, an open authorization, or simply a hold, is an Authorization request submitted before the final transaction amount is known or before the merchant is ready to capture. It reserves a specified amount of funds on the cardholder's account, confirming the card is valid and has available credit or funds, without immediately committing the merchant to capturing that exact amount.

Pre-authorization is the standard model in industries where the final charge is determined after the initial reservation: hotels authorize for the expected stay amount at check-in and adjust at checkout; car rental companies authorize for the estimated rental cost plus a security deposit and charge the final amount when the car is returned; restaurants occasionally pre-authorize for the estimated meal amount before adding tip. In each case, the pre-auth confirms payment capability while allowing the final amount to be determined by actual usage.

The distinction between a pre-authorization and a standard authorization is primarily one of business intent and the workflow that follows, not a technically different message type in most card network implementations. What makes a pre-authorization distinct is the expectation that the capture will follow at a later time and potentially for a different amount, and that the authorization hold may need to be maintained across multiple days.

Hold durations for pre-authorizations vary by merchant category. Standard transaction holds are typically 7 days. Hotel and accommodation holds can be maintained for up to 31 days under card network rules. Car rental and cruise line holds have similarly extended windows. These extended hold durations exist to accommodate the business realities of industries where guests check in but stay for weeks.