Payments
Authorisation, capture and settlement explained
Three payment stages that look similar in a dashboard but mean very different things for your business.
Payment status labels can be confusing, especially when an approved transaction has not yet appeared in your bank account. Authorisation, capture and settlement describe separate stages. Knowing the difference helps customer support, finance and fulfilment teams work from the same understanding.
Authorisation is a decision, not a deposit
An authorisation asks the issuer whether a transaction can proceed. An approved request may place a hold on available funds, subject to the payment method and issuer's practices. That hold is not a final transfer to the merchant. Authorisations have validity periods and may expire. If you capture later, ask your provider how the timing rules apply to your business and what happens when a hold is no longer valid.
Capture moves the transaction forward
Capture submits an authorised transaction for the next processing stages. Some businesses capture immediately; others wait until goods are ready to ship or a service has been delivered. Delayed capture should follow the applicable payment rules and your agreed customer terms. Do not assume every method supports partial or multiple captures. Clearly define which system triggers capture and ensure it cannot accidentally submit the same order twice.
Settlement and payout are different
Settlement concerns the movement of funds between participating financial institutions. Payout is the provider's transfer to your merchant bank account under your contract. Cut-off times, bank holidays, reserves, currencies and risk reviews can affect when a payout is available. Reconcile transactions to settlement records and then to bank deposits. This layered approach makes delays easier to diagnose than treating every missing deposit as a checkout failure.
Key takeaways
- An approved payment is not a guaranteed final deposit.
- Match capture timing to fulfilment and applicable rules.
- Reconcile transaction, settlement and payout records separately.
For general information only; not financial, legal or compliance advice. Availability, fees, obligations and payment rules vary by provider, method and jurisdiction. Confirm the requirements applicable to your business with your provider or a qualified adviser.