Authorized Transaction: How It Works With Credit and Debit Cards

What Is an Authorized Transaction? An authorized transaction is a debit or credit card payment for which the merchant has received approval from the card-issuing bank. In most cases today, the authorization process is electronic and virtually instantaneous.Key TakeawaysAn authorized transaction is a debit or credit card payment that has been approved by the cardholder's bank.While almost instantaneous, the process involves multiple entities.A card can be declined for many reasons, such as if not enough funds or credit are available on it, or if it has expired.Cards today incorporate a variety of safeguards to protect against the theft of a cardholder's information. How an Authorized Transaction Works Although credit and debit card transactions are often completed in a matter of seconds, the infrastructure that makes that possible involves a number of players, including the individual merchant, the financial institution that issued the card, and their payment processing companies and ne...