Manage cardholder transactions
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In the European Union (EU), transactions are processed using Mastercard’s dual message system, in which:
The merchant first sends an authorization message to instantly verify and hold the funds in the cardholder’s account.
Upon verification, the merchant then sends a clearing message at a later point in time to debit or credit the cardholder.
For example, when a customer performs an online transaction, an authorization message containing the information required for an authorization decision is sent at the time of purchase. A follow-up clearing message, containing additional information required for clearing and settlement, can then be sent once the goods are dispatched.
During its lifecycle, a transaction will transition through various stages, depending on the actions taken by the cardholder, merchant, issuer, and card network.
Typically, a successful transaction will transition through authorization, clearing, and settlement stages.
If you've set up webhook notifications, you'll be notified of changes in a transaction's status with a webhook.
Authorization, the initial stage of a transaction, is used to confirm that:
- the card and cardholder are genuine
- the cardholder has sufficient funds to complete the transaction
Authorization requests are sent from the merchant to the issuer in near real-time, with responses typically being sent back to the merchant within 5 to 7 seconds.
If you’ve enabled the authorization relay service, submitting an authorization request will trigger a relay.
A transaction enters the clearing stage when the merchant submits a capture request to finalize the hold on the funds and post the transaction on the cardholder’s account.
The merchant may choose to only capture a portion of the initial authorization amount in a capture request. This is known as a partial capture. The remainder can be captured in a subsequent capture request, canceled, or expire if no action is taken.
Clearing messages contain additional information about the transaction. For example, reconciliation amounts, interchange fees, acquirer fees, and cardholder billing amounts. Mastercard uses this information to calculate the final amounts to be settled.
When clearing is completed, the transaction enters the settlement stage, in which funds are transferred between the merchant and cardholder banks.
Settlement with Mastercard is done at the Interbank Card Association (ICA) level, which aggregates all the BINs and account ranges.
Mastercard runs five daily settlements per week, which Checkout.com consumes and reports back to you. With shared BINs, this is reported on a per-client basis.
A reversal occurs when a merchant cancels a transaction after a successful authorization, but before it has entered clearing.
The merchant may also choose to only reverse a portion of the initial authorization amount, known as a partial reversal. The remainder can then be captured in a partial capture request and enter clearing.
A refund occurs when a cardholder requests that the merchant returns the funds from a transaction after clearing has been completed.
A refund can either be included within a transaction’s clearing information, or be preceded by a refund authorization request which the issuer can approve or decline.
A chargeback occurs when the issuer disputes a completed transaction on behalf of the cardholder.
The transaction lifecycle is structured as a stream of events, with a new event triggering when the transaction transitions to a new stage.
If you've set up webhook notifications, you'll be notified of changes in a transaction's status. For example:
Checkout.com groups events that are linked to the same transaction under the same transaction ID, so that you can easily monitor the transaction's payment journey. This ID is returned in the request response.