How to improve payment conversion with delegated authentication
What is a credit card authorization number?
When a customer uses a credit or debit card to make a purchase at the point of sale (POS) – so, through a card reader at your bricks-and-mortar store – the whole transaction may appear instantaneous. But behind the scenes, there’s so much more going on.
Because, while it’s easy to think of the customer swiping, inserting, or tapping their card on the terminal as the whole payment, it’s actually just the start of the long, complex credit card processing journey. And that process begins with authorization.
Authorization is the process your payment service provider or bank – working with your customer’s bank – goes through to ensure the card being used for payment is valid. If it is, you’ll know straight away – which is where credit card authorization numbers come in.
So what is a credit card authorization number? Do they expire? How do you get one, and how do they work? But more importantly, what can your business do to better understand these numbers – and use them to safeguard your revenue and reputation against chargebacks and credit card disputes?
Let’s find out.
What is a credit card authorization number?
A credit card authorization number is an alphanumeric code – typically two to six digits long – you’ll receive when a credit or debit card payment has been approved.
It’s important not to confuse a credit card authorization number – which confirms the transaction’s validity – with a denial code.
You’ll receive a denial code if the issuing bank doesn’t authorize the transaction. This can occur in cases when:
- The card has been reported lost or stolen
- The cardholder’s account doesn’t have enough money to make the purchase
- The cardholder has an active hold on their account
Just as it’s crucial to understand the significance of credit card authorization codes, it’s also vital to understand what their opposites mean.
Some denial codes – those indicating the entry of an incorrect PIN, for instance, or the cardholder removing the card too quickly – may simply indicate that the customer needs to attempt the transaction again.
Other denial codes, however, may require specific action from the merchant. That could include calling the bank for more information, or – in the case of a lost or stolen card, or an account no longer in good standing – withholding the card from the customer.
How to get a credit card authorization code
When a debit or credit card transaction is authorized in the case of an in-person transaction, you’ll receive the code on the screen of your POS terminal. Then, when your terminal produces a bill of sale, the credit card authorization code will appear there – either at the top or bottom of the physical receipt – too.
Credit card authorization codes for card-not-present transactions – ones that take place online, for example – are available in the merchant services dashboard your payment service provider, such as Checkout.com, equips you with. (Along with a whole set of other information about the sale: including the time and date, value, and unique transaction ID.)
Should you need it, you can later use this credit card authorization code as a reference or evidence when it comes to order fulfillment – or winning a credit card dispute.
How do credit card authorization numbers work?
Credit card authorization numbers exist to tell you (and the customer) that their credit or debit card purchase has been verified.
This verification comes from the issuing bank (that is, your customer’s bank), which confirms a few things. Namely, that:
- The account the card is attached to exists.
- There are no active holds on the account.
- The card hasn’t been reported lost or stolen.
- The account contains sufficient funds or credit to complete the purchase.
The validation of these details is then submitted, via the payment processor or financial institution you use, back to you – in the form of a credit card authorization number.
Can a credit card authorization code expire?
Yes – a credit card authorization code can expire.
If you fail to complete a transaction promptly (the exact time period will vary, depending on the policies of the payment processor or credit card issuer involved), the credit card authorization code can expire.
The reason for this expiry date? To ensure transactions are settled in a timely manner – and prevent the fraudulent or unauthorized use of codes. If your credit card authorization code has expired, you may need to request a new one from the card issuer or payment processor. Plus, by re-verifying the transaction, you ensure you’re working with all the most recent information: including the cardholder’s account status and credit limit.
If you need to authorize a customer’s card – but without actually charging it yet – you can place a temporary hold on the account. This is called a pre-authorization charge.
By pre-authorizing a card, you can ensure it’s valid, and that it contains enough funds to cover the cost of a transaction, but without debiting those funds upfront.
This is particularly common in the hospitality industry. For example, by verifying their guests’ ability to pay when they check in, hotels can be confident that – by the time full payment is due on check out – the guest will be able to honor their financial obligations for the stay.
Credit card authorization response code list
So – what does a credit card authorization code actually look like? Well, that can depend on the specifics of the payment service provider you process payments with.
You can view Checkout.com’s full range of response codes. Or get a general overview of how we categorize the authorization status of transactions via the code ranges below:
- 10000: the request was successful.
- 20000 (soft decline): the request was declined, but subsequent attempts may work.
- 30000 (hard decline): the request was declined, and requires the cardholder or issuing bank to rectify the issue before any further attempts to complete the purchase.
- 40000 (risk response): the request has been flagged as potentially fraudulent.
Within each of these ranges, more specific codes indicate the exact nature of the issue. In the successful request range, for example:
- 10000 is approved.
- 10010 is approved, but flagged as a potentially risky transaction.
As that last code demonstrates, credit card authorization codes can flag potentially risky transactions – even after successfully verifying the cardholder and confirming the transaction.
This allows you to examine a transaction after it’s been authorized to dig deeper for any other warning signs. If you spot any more red flags suggesting fraud – and the payment hasn’t yet been settled – you could choose to void the transaction to avoid facing a chargeback (and the associated fees your business will be liable for) down the line.
On the other hand, denial codes clue you in as to exactly why the transaction didn’t go through. These let you know whether the customer should try again (a ‘soft’ decline) or if it’s an issue with the issuing bank that can’t be resolved on the spot (a ‘hard’ decline).
In our soft decline response code range (20000), for example:
- 20017 is a customer cancellation.
- 20019 is an expired transaction.
- 20051 indicates insufficient cardholder funds.
- 20054 is an expired card.
- 20055 is an incorrect PIN.
There are hundreds of these codes. And, while that can seem overwhelming, what it really means is that you have all the information you need to understand why a credit or debit card payment has (or hasn’t) been authorized – at your fingertips.
Understand credit card authorization numbers with Checkout.com
As a business, maintaining high authorization rates is crucial. It means more sales; more revenue; and a larger, more satisfied customer base. But to maintain a good authorization rate – and be able to optimize it going forward – you first need to understand the rhyme and reason behind the credit card authorization numbers you’re seeing every day.
And here, Checkout.com can help. We empower your business with insights into all the card, transaction and payment processing data you need to minimize chargebacks and curtail the tedious, time-consuming (and ultimately, damaging) credit card disputes process.
With authorization and decline codes visible from a simple, centralized dashboard, you can understand exactly how many transactions are going through, or failing to progress – and why. And, with our help, know exactly what to do when faced with an issuer decline.
Want to know more about how Checkout.com can drive down your disputes – and drive up your authorization rates? Get in touch with our team today to start the conversation.
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