ONLINE PAYMENTS CHEAT-SHEET

Figuring out how to collect payments online can be confusing. Our online payments cheat-sheet helps you sift through the myriad options by focusing on the terms and tools that matter.

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Authorization

A credit card authorization is used when you want to verify a customer has sufficient funds on their card to pay for a transaction. If the authorization is approved, a hold is placed on the customer’s account and their credit line is reduced by that specific amount.

With Stripe, an amount can be authorized and put on “hold” for up to seven days. After seven days the authorization expires and can no longer be collected.

So when might you need to use an authorization? Here are two quick examples:

  1. If you’re shipping something and don’t want to charge the customer until the item ships.
  2. If you’re selling a product with a trial period, but want to make sure the customer’s credit card is valid, so that you can charge it at the end of the trial period.