Pre-Authorization

Pre-Authorizations ("pre-auths") are temporary holds that merchants place on a cardholder's funds instead of immediately debiting the cardholder. They tend to be for a higher amount than the price of the purchased product/service. Pre-auths can be inconvenient for the final user because they will be unable to spend the pre-authed funds until the pre-auth window has passed and the transaction has either settled or returned. This is often confusing for users because the transaction is not yet visible on their statements, since the transaction has not yet (technically) taken place.

For example, a user could have an initial bill of $23 for food delivery. However, the merchant issues a $30 pre-auth to account for anticipated tips. After a couple of days, the merchant settles the transaction and includes the user's $2 tip, making the final transaction amount $25.

Expected Behavior

When a pre-auth is initiated, a transaction is created with "status": "CREATED". The pre-auth amount is determined by the merchant (with the exception of Automated Fuel Dispenser Transactions, mentioned below). If the user has the funds, it will move quickly to "status": "PROCESSING-DEBIT" and then "status": "PROCESSING-CREDIT".

If the merchant does complete the transaction, the transaction will be updated with "status": "SETTLED"and "code": "pre_auth_completion".

If the merchant does not complete the transaction after 7 days, the pre-auth will drop, with "status": "RETURNED" and "code": "pre_auth_expiration".

Please keep in mind:

• Pre-Auths will count toward a user's limits

• We have seen online merchants make heavy use of pre-auths

Pre-Auth Risk

It is not uncommon for the final settled amount to be higher than the pre-auth amount. This is expected behavior. However, if you suspect a merchant is fraudulently inflating the settlement amount, our only real recourse is filing disputes or requesting to block the merchant altogether.

Additionally, please note that we cannot cancel a pre-auth while it is processing, so if a user creates a transaction and is later locked, you will ultimately be responsible for covering any losses.

Automated Fuel Dispenser Transactions

Automated Fuel Dispenser (AFD) transactions (aka “gas transactions") are pre-auths associated with fuel purchases at gas stations. Synapse sets the standard pre-auth amount for such transactions at $100. This temporary hold ensures the cardholder is liable for up to $100 when the pre-auth clears. If the value of the fuel dispensed was less than $100, the transaction will settle for the lower amount and the balance of the associated node should update once the pre-auth completes (i.e. with "recent_status.status": "SETTLED" and "recent_status.note": "pre_auth_completion").