Credit Card Capture Definition

Credit Card Capture or Authorization Capture takes place after payment authorization. It’s when the authorized money is transferred from the customer’s account to a merchant’s account. It means that the transaction amount doesn’t reach the merchant account until the funds are captured.

The interesting part is when a credit card transaction is made. Then, the payment processing go through the two stage:

  1. The credit card authorization, which is the verification stage of the transaction by the credit card company. They check the customer’s credit card validity and whether he or she has the sufficient funds for the transaction. When everything’s fine, the transaction is then authorized and the total amount of transaction is deducted and held from the customer’s credit line account. Note that the money is not transferred to the merchant account yet. This is when credit card capture comes in.
  2. Authorization capture is a way that merchant tells the credit card company that transaction has been completed between him/her and the customer, and money can now be transferred.

Look at the example below

If a customer makes a transaction of $20 (and pays with credit card), and it is authorized by credit card company, the $20 is deducted from the customer’s credit card account and waits for an authorization capture from the merchant to be transferred. After shipping the product, merchant issues a credit card capture for $20 from the customer’s credit card.

There is a given time frame set between an authorization and a capture to which merchant is able to capture authorized funds. It can be up to 10 days or 5 days in some cases, depending on the credit card scheme. Credit card authorization must be captured within this set time, if not, the card authorization becomes void and the deducted fund is returned to the customer’s account.

Credit card capture comes in two ways:

  1. Automatically: This is the most common scenario. It’s when the credit card capture is automatically sent by the merchant’s acquiring bank on behalf of the merchant. A merchant doesn’t have to do it manually, and the funds are usually captured immediately after the authorization.
  2. Delayed: In this scenario, the merchant request to have the ability to control their credit card authorization manually. Capture delay is the period between payment authorization and a capture request. The capture request must be send between this period, or the authorization will expire. This scenario is common with servicing companies, in which customer pays for a service and the payment has been authorized, but the capture is delayed till after the service is delivered.