Pre-Authorization Hold(Auth Hold)

A pre-authorization hold (also called an auth hold or pre-auth) is a temporary reservation of funds on a customer's credit card. When a merchant initiates a pre-authorization, the card issuer sets aside the requested amount, reducing the customer's available credit without transferring any money to the merchant.

The key distinction from a regular charge is timing and flexibility. With a standard payment, funds are captured immediately. With a pre-authorization, the merchant decides later whether to capture the full amount, capture a partial amount, or release the hold entirely. This three-way flexibility makes pre-auths ideal for situations where the final amount isn't known upfront.

Pre-authorization holds are implemented through what payment processors call 'manual capture' mode. Instead of the default auto-capture behavior, the payment is created with capture_method set to manual. This tells the processor to authorize the card but wait for an explicit capture instruction from the merchant.

From the customer's perspective, a pre-auth appears as a 'pending' transaction on their credit card statement. The held amount reduces their available balance but doesn't appear as an actual charge. If the hold is released without capture, the pending transaction disappears and the full credit limit is restored.