Credit card authorization is the process of verifying that a credit card is valid and has the necessary funds to cover a purchase. The authorization process also determines whether the credit card is being used for legitimate purposes.
There are two main types of credit card authorizations: an authorization code and an authorization hold. An authorization code is a three- or four-digit number that is generated by the credit card issuer. This code indicates that the purchase has been approved by the credit card issuer. An authorization hold is a temporary charge that is placed on a credit card account. This hold is usually for a specific amount of money, and it may be released after a certain period.
An authorization code or an authorization hold is not a guarantee of payment. The credit card issuer may still decline the charges if the purchase is not completed or if the credit card holder does not have enough funds to cover the purchase.