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The authorization of a credit card is the process by which the card issuers approve, deny or refer credit card transactions that are presented to them for payment by a merchant. If the transaction is approved, an authorization code will be published.
The approval is based on the account statement of the holder. The authorization code refers specifically to a single transaction, to facilitate the monitoring and reversal of the operation if necessary.
Once the authorization code has been issued, it will result in a series of different actions. The card issuing bank will keep the funds, deduct the amount of the credit limit from the cardholder and pay the funds in the merchant’s account, usually at the end of the workday.
Credit card authorization can be denied due to lack of funds, expiration or freezing of plastic, fraud or other issues related to the credit card account.
Occasionally, the merchant will receive a referral notice, which usually indicates that some investigation about the credit card has been triggered, such as a security notice.
Credit Card Security Codes
Credit card authorization codes are issued for all transactions, whether in a store, by mail or by phone or online. To help prevent credit card fraud, most credit cards have a three or four digit security code printed on the back or on the front of the card, called CVV2 or CID codes, depending on the type of card This security code is independent of the credit card number, but must be picked up by any online business that wants to make sure that it receives authorization codes for credit cards issued quickly and easily.