In a credit card transaction, which step occurs when the merchant requests authorization?

In a credit card transaction, which step occurs when the merchant requests authorization?

• A. Funds settle to merchant via acquirer
• B. Merchant requests authorization
• C. Cardholder pays
• D. Batch settlement processes daily

Answer: (B)

Authorization is the step where the merchant asks the issuer to approve the sale and reserve funds. At checkout, the merchant sends an authorization request through the payment network to the card-issuing bank. The issuer checks available credit, validity, and fraud risk, and returns an approved authorization (with a code) or a decline. This creates a temporary hold on the funds, guaranteeing the merchant can collect them later, but no money is transferred yet. The act described—initiating that request—is the essential action in this moment of the process. The other steps happen after authorization: the merchant may capture the sale to move funds toward settlement, batch settlement occurs at the end of the business day, and the cardholder’s payment is completed through the authorization/capture flow.

Authorization is the step where the merchant asks the issuer to approve the sale and reserve funds. At checkout, the merchant sends an authorization request through the payment network to the card-issuing bank. The issuer checks available credit, validity, and fraud risk, and returns an approved authorization (with a code) or a decline. This creates a temporary hold on the funds, guaranteeing the merchant can collect them later, but no money is transferred yet. The act described—initiating that request—is the essential action in this moment of the process.

The other steps happen after authorization: the merchant may capture the sale to move funds toward settlement, batch settlement occurs at the end of the business day, and the cardholder’s payment is completed through the authorization/capture flow.