As an entrepreneur, you need to understand various facets of running a business. This includes the way various payment systems work. Doing so can help you provide better services to your customers, increasing their trust and ultimately increasing your profits.
One such payment system is called authorization and capture. This type of credit card transaction combines two steps, as its name suggests: authorization and capture. To fully understand this payment process, you first need to understand what happens in each step. We discuss them in detail below.
What Is Authorization and Capture?
The process of credit card authorization involves two steps: verifying the customer’s credit card and confirming that there’s sufficient credit remaining for the purchase. Once these two steps are completed successfully, the credit card’s funds are put on hold.
Note that while credit card authorization deducts the amount from the credit card’s credit limit, the transaction is still considered pending. This means that the funds aren’t transferred to the merchant’s account yet. This requires the next step, which is the capture process.
Credit card capture is the settlement process. Once the transaction is deemed successful, the funds that were previously “held” in the authorization process are “captured” from the customer’s account.
Not all point-of-sale (POS) systems offer authorization and capture support. If you want to offer this to your customers, it’s best to get a POS terminal or device like PayMaya One Lite to ensure accurate and secure transactions.
Why You Need a POS With Authorization and Capture
Authorization and capture is one of the most convenient payment options that a business can offer. Its primary benefit is security, both for you and your customers. On your end, you can be sure that the buyer indeed has enough funds to cover the availed product or service. On the customer’s end, they can rest assured that they will only be charged after they receive the product or service.
Below are a few more reasons to opt for POS systems like PayMaya One Lite for authorization and capture:
Instill Customer Confidence
Among the biggest fears of any customer are fraudulent transactions. It can be frustrating or even downright infuriating to see transactions charged to their card for purchases that they didn’t make. The process of disputing the transaction can also take a long time, and the chargeback may not be even credited in full.
Imagine this scenario: your company offers home cleaning services for Php 2,000 per session. A customer books on a Monday but wants the cleaning to be done on a Friday. You can issue a credit card authorization for Php 2,000 right when the customer makes the booking. This will let you know if the customer’s credit card has enough funds.
Then, on Friday, your cleaning staff arrives at the customer’s house. After the cleaning is done, the customer confirms it and your staff also lets you know that they completed the booking. You can then issue the credit card capture for Php 2,000 so that it gets transferred to your account.
This is a win-win situation. The customer is confident that they won’t get scammed by a “pay first” policy. At the same time, your business can ensure that you’ll get paid because the funds are already “reserved” for your transaction.
Ideal for Repetitive Purchases
If you offer subscription services, authorization and capture support becomes even more valuable. This is because you can issue the authorization multiple times and then issue the capture based on the subscription schedule.
Offers Flexibility
Authorization and capture also allows for partial authorization. This means that the customer’s credit card is in good standing, but that it may not have sufficient funds for the transaction. If this happens, you can give the customer time to fund their credit card. This minimizes disenfranchisement, since the customer knows they have the time to acquire the money.
Another good thing about authorization and capture is that you can issue multiple capture requests to offer flexibility. For example, if the cost is Php 1,000, you can send four Php 250 requests each. This can definitely be an attractive option for your customers.
Modern businesses need to offer modern, innovative solutions to keep up with the times. If you don’t, you’ll be left behind by your competitors and you may even lose customers.
That’s why you should always keep yourself updated with the latest technologies and business trends. From best practices in digital marketing to gadgets or devices that can make transactions more seamless, you need to be knowledgeable and willing to invest.
If you don’t have a POS system that supports authorization and capture yet, now is the time to get one. As the business landscape continues to evolve, it’s wise to invest in technology that can take your business to the next level. In the end, both you and your customers will benefit from this investment.
