What is Provision?

What Is Authorization (Provision)?

As intercountry circulation and consequently consumption rapidly increased, other needs arose as a result of money and existing payment systems being unable to meet these needs. Additionally, the lack of a common currency among countries, differences in currency values, and the risk of carrying cash led to the understanding that there was a need for a payment tool that could be used for purchasing goods and services anywhere in the world and could meet cash requirements. As a result of existing payment systems being unable to fully meet these needs, the credit card first appeared in the USA in the 19th century as a new payment tool. Credit cards, which initially had a narrow area of use, have become one of the most important organs of banking and individual trade today along with technological developments. Credit cards first came to prominence in the tourism sector. Later, banks wanting to increase their profit margins through retail banking discovered this payment tool and credit card usage rates increased. With credit cards, banks began to reduce credit risk and achieve higher profits by giving many loans with lower limits compared to corporate loans.

Although credit card application in our country is very new compared to other developed countries, it entered our lives very quickly. Along with increasing competition, credit cards have become one of the most important tools of retail banking in the banking field. Apart from increasing competition, the very rapid spread of credit cards pushed banks to act jointly with other banks. Banks that did not want to fall behind in this race agreed on various issues and started using ATMs and merchant locations in sync with other banks. In addition, the need for communication and information exchange between banks increased so much that as a result of this need, interbank card centers were put into operation to carry out and facilitate communication from a single point. The example of this in our country is known as the Interbank Card Center. While banks work in such an interactive, both competitive and collaborative manner in the credit card sector, the clearing of transactions and the settlement of parties has become increasingly difficult. For this reason, settlements made bilaterally between individual banks in the early days have now been replaced by international card centers of which multiple banks and institutions are members. Banks have spread credit card usage to increase their revenues.

• Credit card

• Authorization process

• Types of authorization

Authorization Features

After credit cards entered our lives, a number of financial terms also came to the agenda. One of these is authorization (provision), which we frequently encounter today. Authorization, meaning that a certain amount is temporarily blocked from the credit card before the seller receives payment for a transaction made by a customer with a credit card, is a word of French origin and means "provision" or "collateral" in Turkish. As a result of this transaction, it results in the collection or cancellation of the specified amount. This banking transaction is frequently used especially in businesses such as hotels, restaurants, and e-commerce sites. For example, for a reservation made for accommodation at a hotel, a certain amount is authorized from the customer's credit card. This authorization, or blocking process, is used to determine the total amount the customer must pay at the end of their stay. Authorization helps sellers minimize payment risks while allowing customers to control their credit card limits. You don't need to take any action for the authorization process. Except for cancellation or refund transactions, this process proceeds in the same way for all expenditures you make with your credit card. If you detect a movement in your account against your will, you can cancel the authorization process. Thus, even in case of theft, transactions made within the pending authorization period are brought under control. The items you purchase in your expenditures with credit cards are kept in the system for a certain period until they receive authorization approval. During this pending authorization process, banks check and examine issues such as your debt status and whether the transactions were carried out with your approval. If all questions are in your favor, transactions in authorization are usually completed within 1 or 2 business days.

Pending Authorization

One of the concepts often wondered about along with authorization is pending authorization. After making a card payment, the amount is kept in the authorization process for a while. During this period, the reliability of the transaction and limit information are checked by the bank. While the transaction made remains in pending authorization until the end of the day, if no problem is encountered, the spending transaction is carried out. This process usually takes 1 day, and in some cases can extend up to 2 days. Especially in online grocery shopping, the authorization waiting process is frequently applied. Due to weight differences in produce items, the amount we paid waits in authorization, and the updated amount according to the order status is collected by the bank and processed. Pending authorization shows the current balance in the account holder's account and may affect the available balance of the account.

Authorization Cancellation

You can cancel a transaction waiting in authorization by contacting your bank. However, you need to state a valid reason to have your transaction in authorization cancelled. Authorization cancellation's most common reasons include the transaction being carried out by someone else or officially not receiving the paid product or service. If you have these and similar reasons, you can cancel your transaction in authorization by contacting your bank. To shop freely and more securely in stores or on the internet, you need to know your rights and technical matters in all details. If you master these details and know your rights, you can easily handle your shopping in both the physical and digital world.

Authorization Advantages

The biggest advantage of authorization payment systems is establishing trust. Authorization, which serves to keep payments safe, especially makes online payments more secure. On the other hand, it also plays an important role in preventing any fraud. Authorization greatly reduces the victimization of individuals due to fraud and forgery. Waiting in authorization checks the account and limit of the person who will make payment and provides an extra layer of security this way. Another advantage of the authorization process is speeding up the payment process. Since the authorization process checks the validity of the customer's credit card or bank account and processes it before making payment, it speeds up this process securely. Advantageous for sellers as well, this authorization process enables you to manage inventory. With this banking transaction, they can check product inventories and ensure products stay in stock or run out. If the customer wants to return the product they purchased, the seller can cancel the authorization process after the product is returned. Thus, the return process is completed more quickly for the customer.

Authorization Code

Authorization code term refers to the approval of a predetermined amount for a transaction. Before the spending transaction is made, the available limit of the card is checked and an authorization code is created within this limit. This code guarantees the availability of the specified amount until the transaction is made. For example, when you eat at a restaurant, an authorization code is created for a predetermined amount, usually the amount of your bill, so your bill can be paid. This code is created by temporarily separating this amount from your account until the payment transaction is completed. When the transaction is completed, this code is cancelled and the remaining amount in your account becomes available for spending. You can learn your authorization code through internet banking. Learning the authorization code both ensures the security of your transactions and makes it easier to track these transactions. If there is a spending against your will, you can learn the authorization code and track your account movements. Of course, the system is different at every bank, so when you experience a problem, you can contact your bank to create a transaction statement or cancellation request.

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