Understanding Payment Performance

What is Authorization?

Authorization is the process by which a cardholder's issuing bank approves or declines a transaction. When a customer attempts to make a purchase, their card issuer checks if the account has sufficient funds and if the transaction appears legitimate.

An authorized transaction means the issuer has approved the purchase amount to be charged to the customer's account.

Note: Reveal considers a transaction as authorized even if it was later expired or voided by the merchant. However, an order is only considered authorized if it was successfully captured (i.e., the funds were actually transferred).

Transactions vs Orders

Before diving into authorization rates, it's important to understand the distinction between transactions and orders:

• A transaction represents a single attempt to charge a payment method.
• An order may consist of one or more transactions, especially if the initial payment attempt fails or if the order involves authorizations.

This distinction is crucial when interpreting authorization rates, as you'll see in the example below.

Example:
Imagine that your customer tries to make a $100 purchase. Their first credit card is declined (Transaction 1), so they try a second card which is approved (Transaction 2).

This scenario represents:

• Two transactions: one declined, one approved
• One order: successfully completed

In the next section we will talk about Authorization Rates and how to measure them.