Operating income (EBITDA)

When a financial institution, such as the beneficiary bank, confirms that the payment information provided by the user has been reconciled with the information on file at the relevant financial institution, such as the beneficiary bank, this is known as a transaction authorisation. This means that payment for goods and services can be made using the relevant means of payment.

Sentences using an Allowed transaction

1. The merchant has completed the sale after the acquiring bank has authorized the transaction.

2. Our payment process requires customers to authorize their payments before we can proceed with the transaction.

3. The financial institution has successfully confirmed and authorized the customer’s payment information.

4. We had to wait for payment authorization before processing the transaction.

5. The credit card issuer has authorized the transaction after confirming the customer’s identity.

6. We can only complete this purchase after you authorize the transaction.

7. After entering their payment information, customers must authorize the transaction for us to proceed with payment.

What is an authorized transaction?

A purchase made with a debit or credit card approved by the bank issuing the customer’s payment card is an authorized transaction.

Key moments

A purchase made with a debit or credit card approved by the bank issuing the customer’s payment card is an authorized transaction.

The lead party in the transaction is the merchant’s bank, which receives the credit card information from the payment system once it is recognised.

The authorization is complete when the merchant bank and the payment facilitator are contacted to obtain confirmation from the cardholder’s financial institution that there is sufficient money in the account to cover the charge.

What do we mean by an “authorised transaction”?

Enabled transactions are a step in the electronic payment process. To carry out an electronic transaction, several parties, including the cardholder, must cooperate.

Electronic payment transactions

The infrastructure that enables electronic payments includes financial institutions, retailers and payment processing intermediaries. The cardholder who wants to use a payment card takes the first step in electronic billing. The cardholder authorizes the transaction by giving the card to the merchant and, if necessary, identifying themselves. The payment system sends the card information to the merchant’s bank after the customer swipes their card through a card reader or enters it into an online retailer’s payment system (also called an acquiring bank).

Payment card processing usually requires the entry of some additional data, such as a personal identification number, expiry date, postcode or card security code.

The merchant bank, the primary intermediary in an electronic transaction, receives the card information once it is entered. The merchant bank works on behalf of the merchant to get the money paid and deposited into their account. After receiving the payment data, the merchant bank uses its payment network to route payment communication through the correct channel.

Most commercial banks collaborate with a network of processors, allowing businesses to accept several different card brands such as Visa, Mastercard and American Express. The payment intermediary contacts the cardholder’s bank, also known as the issuing bank. According to the issuing bank, there must be enough money in the cardholder’s account to cover the fee. Additionally, they may have some safeguards in place to help stop unauthorized charges.

The approval of the issuing bank is crucial in the transaction authorisation process. The processor sends the message to the merchant bank, which then confirms the charge to the merchant once the issuing bank has approved the bill.

The last party to the transaction is the commercial bank. It informs the trader of the authorisation and is the bank of last resort in the transaction. The merchant bank will take action to deposit the funds into the merchant’s account once the transaction is confirmed by the merchant as authorized.

Reasons for rejected transactions

The transaction will be rejected if it cannot be resolved. There are many reasons why a card may be rejected, including the following:

The requested transaction would cause the cardholder to exceed the card’s credit limit or the cardholder needs more money in their account to cover it.

The card has been reported lost or stolen.

The card is a fake.

The card is no longer valid.

There is a technical problem.

The cardholder entered the credit card information incorrectly.