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Credit Card Authorization

Your customers want to pay by credit card, but it’s not as easy to keep good records. Use this credit card authorization form, and optimize your credit card payments. It’s easy and simple to keep records of your credit card transactions and prevent disputes. Ask your customers the right questions, and even have them e-sign for the most convenient payment process.

Your credit card company or government authorities might require paper or electronic forms with specific information, unique to each transaction. Some of these unique identifiers can be purchase order numbers, customer numbers, tracking numbers, or authorization stamps. Get as much information as you need with this customizable credit card authorization form template.

You’ll need to do all of the proper research and homework first, but this template will give you a head-start and a good framework. You should always consult a lawyer though before finalizing any contracts.

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Credit card authorization is a process that helps with payment transactions. It’s when the merchant’s payment system, called the “acquirer,” sends a message to the credit card issuer to verify that funds are available for the transaction. Depending on the card, it might do different things when the card company receives this message.

In general, the card issuer will send a response that the transaction is approved or denied. If there are not enough funds in the credit line, the transaction will be denied. If approved, the transaction proceeds to the next step: the authorization hold. The authorization hold amount is controlled by the merchant. If you want to reduce the risk of non-payment, you can increase the hold amount above the actual purchase amount.

An authorization hold is when the payment system asks for some amount of money to be reserved in the credit card account. The account has a “line of credit,” which is a number of funds that are available to be paid out. When a hold is placed, the amount is decreased by the amount of the hold. The actual amount in the account remains the same, but if another authorization is attempted which exceeds the amount available, the authorization will fail.

Authorization forms should indicate the hold terms. For example, a hotel might place a hold for a reasonable amount relative to the type of room, and likely costs from the minibar, room service, and additional charges. At the end of the reservation, the hold is removed and actual charges are paid. By sending a hold, the hotel reserves the funds and reduces the risk of nonpayment.

If you’re selling services online and have recurring clients, you might want to consider keeping an authorization form on file. Although building trust with your clients is always an important first step, keeping an authorization form gives you that extra bit of protection.

Because these forms contain the client’s payment information, they should be kept in an extra-secure place like an encrypted PDF. There’s nothing more convenient, however, because clients won’t need to provide their payment information over and over, allowing them to focus on the great products and services you’re providing them, not the payment process.

Authorization holds can be issued up to 31 days for hospitality, but typically are around 7 days for e-commerce transactions, and 1 day for recurring online payments. The Merchant Category Code (MCC) defines how long such holds can be made for, depending on the transaction type. As a business, the longer the hold means the more protection, and time to handle disputes. Holds can’t be disputed, so they are the first line of defense to prevent fraud.

If your authorization hold is too short, it can lead to disputes and chargebacks, which can involve additional fees and charges. If the hold period is too long, it might result in unhappy customers.

It’s important to choose an appropriate authorization hold period. Depending on the industry, the likelihood of fraud varies. In e-commerce, fraud might have higher chances of happening. For this reason, longer holds are likely. If a transaction needs to be cancelled, it’s much less expensive to remove a hold than to perform a chargeback or refund.

After the authorization is successful, many online payment systems automatically proceed to the “Capturing” process, where the money is actually transferred. This capture process allows the funds to become available for the merchant’s account. Holds are removed, and the transaction is complete. It can be reversed using a dispute resolution process with the payment company.

Dispute resolution services even exist and act similarly to insurance companies. By paying a small amount every month, you can hire one of these companies to optimize your payment process. It’s beneficial to have such a company on-hand because you won’t need to hire lawyers to handle disputes for each separate incident.

When you create a credit card authorization form, that form isn’t a receipt. It is only the first step of the process of a credit card payment. After authorization, payment should happen if the customer accepts the goods or services. The confirmation of payment is then shown with a receipt, which is provided for proof of payment from the merchant to the customer.

Credit card authorization forms are useful when the business must charge the customer many times, especially on an irregular schedule. It’s possible that some anti-fraud systems are likely to detect such irregular transactions as fraud. When transactions are disputed, the signed credit card authorization form greatly reduces the risk of chargebacks. Because the credit card company will see proof that you as the merchant can legally charge the client, it’s much less likely for the customer to win a refund.

Chargebacks can be some of the most costly fees that a small business pays. These fees can cut into profits and make it more difficult to operate in certain industries. By having such a signed form, you can protect your business.

Such forms can be signed in-person or by electronic means. If signed electronically, the authorization forms have just as much protection as paper forms. They also record additional details like precise time-of-signature, which can be very valuable for disputes. It’s recommended to customize and use a PDF template like this one. Because PDFs are inherently more tamper-resistant than word documents, they work well for receipts and authorization forms like this one.

If you have received or desire to issue any legal document, you must consult a lawyer. Kdan Mobile provides this template for educational purposes only, and you are always responsible for the creation of any legal agreements you sign. By clicking "download," you agree to indemnify and hold harmless and inure Kdan Mobile for any damages incurred due to the use of the said template for commercial purposes.

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