Card authorization is permission to conduct a transaction with a bank card provided by the issuing bank. It is carried out if the debited sum exceeds the unauthorized limit (the sum of the purchase set by the bank for the deal that does not require authorization). Regardless of the state of the cardholder’s account, the bank guarantees a compensate to the merchant within the limits of this sum.
In general, there are two authorization methods:
- When the seller contacts the bank, which carries out operations with the card or with the acquiring center by telephone. Nowadays, with the development of communications, it is practically not used;
- When a person requests permission to operate through a POS terminal to an acquiring bank.
In other words, this is a process of confirming the rights for performing certain operations, such as account management, withdrawals, and data changes. When performing an operation, it is necessary to ensure security, to delineate the rights of users and to protect against intruders.
The whole authorization procedure can be divided into the following steps:
- Authorization is made either by voice or automatically.
- The authorization center analyzes and verifies information, including the owner’s data, information concerning the available limits or some other restrictions.
- Basing on the available balance, card limits, and other additional data, the authorization center decides to conduct a transaction or cancel it. In case when the authorization is made by voice, the authorization code is reported and is further recorded on the check.
- The stage of printing the check. The check also indicates the authorization code, these transactions, indicating that the seller accepted the payment with the card.
- Money is transferred to the seller.
The core advantage of the system is the efficiency of operations. The drawback is the dependence on the Internet connection. If it is not available, it will be impossible to make payments.