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Credit Card Charges. What is a Credit Card Charge vs an Authorization?

We spent so much time answering emails about "Double Billing" or "2 charges on my card" that we've created this boring webpage covering the finer points of credit card processing. In the good old days, you never saw the "behind the scenes" process of authorizations and charges, so it's almost a matter of too much information being available without enough explanation.

For a completely unbiased definition of an Authorization Hold provided by Wikipedia, The Free Encyclopedia.

Here's our attempt to explain:

In this era of online banking and credit card account management, many customers view their credit card activity daily and think we've charged their card twice (or charged for a cancelled order). The main problem is confusion between credit card AUTHORIZATIONS versus CHARGES.

An AUTHORIZATION occurs the minute you place the order (the authorization date will be the same date you placed the order). The credit card system makes sure you have available funds on your credit card and "holds" the purchase amount as "used credit" and also checks the address. No funds are transferred to our company at this time -- it just checks for funds availability and address match. Your bank is "holding the money aside" for us until we ship the order (no merchant should actually charge your card until the merchandise has shipped according to regulations).

The actual CHARGE or SALE occurs on the day that we ship your order (the same or next business day). We never charge a card until all items are packed and the order is ready to go. The charge will "cancel out" the authorization when your credit card matches them up on their end (it usually takes about 24-48 hours for them to post sales against authorizations, it all depends on your card issuer). It just takes a little time to catch up, we guarantee the authorization will disappear like magick!

Our processing software actually makes it impossible for us to charge a card twice for one order. If we try to do it a second time, we get a nasty little "YOU ALREADY CHARGED THIS ONE DUMMY" kinda error message. Any 2nd charge needs to be done manually in a very tedious manner that we try avoid -- and would requires new authorization number (there's that A word again!)

If you call your credit card, they can confirm that the first activity is an AUTHORIZATION and the 2nd is the CHARGE or Sale). Be sure to specifically ask if it's an authorization or a sale, sometimes they don't pay close attention to the codes unless you persist. They don't want you to know too much about the mysteries of credit card processing ;o) You're probably sorry you asked about double billing by now, but we continue on with cancelled orders............

CANCELED ORDERS - ADDRESS VERIFICATION etc.

If the AUTHORIZATION's address verification system returns a "BAD ADDRESS" code (NNN Address Bad Zip Bad), we cannot ship the order until we have the correct cardholder billing info. In these cases, we place the order on hold and contact the customer via email explaining why we can't process the order. We must stress that this is not our policy, it is a standard credit card processing regulation.

The authorization will still appear on the account even if we don't ship the order. Your bank determines how long they keep the authorization active (contact the card issuer to see how long they keep an authorization active since it's an internal bank function).

When we explain that an order cannot be processed due to an address verification problem with credit card, many customers reply "this never happened before" or "other stores never did this". The "other stores" are not complying with 100% Secure credit card processing regulations and disregard credit card security or online fraud prevention procedures. Although our policies may upset some people, but we'd rather do everything in our power to prevent thieves from shipping stuff to their friends and family on your credit card. Think about it, makes sense, doesn't it?

You should also consider that a company that disregards credit card security procedures may also have lax policies for protecting your credit card information once it's in their possession. At TeddyGirl.com, credit card info is seen by only long-term trusted employees and filed under lock and key. We care about our customers.....and we follow the rules.

We continually stress the importance of credit card billing/shipping address verification on the order form, and in order acknowledgement emails. As a security measure we will only ship to an authorized/verified address on file with the credit card. If the secure server relays a security code for non-matching address, we try to reach the card issuer to double check their records....often we can clear up the problem when we talk to a human and get the very latest address records. When we can resolve the address problem through your card issuer, we ship the order and then charge the card later.

If we CAN'T resolve the address verification problem, we do NOT charge the card. We NEVER charge any credit card until the order is fully packed and ready to go out the door. This is a credit card regulation for all merchants, no company should ever charge your credit card before the merchandise is ready to ship.

In some instances, there may appear to be double billing if you use a debit or check card. The banks do not treat these like a credit card and it could put two "holds" on your funds. Each time you place an order, your funds are held. They are held AGAIN when we process the sale. Please understand there is nothing we can do to resolve this. It is an internal banking function that can only be explained by the bank that handles your debit card or credit card account. Also, please refer to our Information section on authorizations. An authorization is NOT a charge, it only checks your account for funds availability, places a "hold" on the funds, and checks the address information against the Visa/Mastercard system's records. If the address doesn't verify, we do not charge the card until we have the corrected information and it is verified by the bank. Each time you hit an order button you are putting a hold on the funds, even if we do not process the order. Eventually the hold will drop off the account based on your bank's policies. We contacted Yahoo systems and this problem cannot be fixed by a merchant, so we will refer our customers to this informational section should they experience bank-related debit card problems or require explanations for held funds on their debit accounts.


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