Open authorization is the name given when a credit card transaction is at any step of the process: Authorization (1) -> POS batch close (2) -> bank's overall end-of-day (3) -> clearing (4) (applicable to not-on-us transactions).
What are some of the reasons a transaction might remain in open authorization?
- The relevant POS's batch has not been closed yet, either from the POS itself or by the bank's system
- After the POS's batch is closed, the bank's system has not yet run its overall end-of-day operation
- For not-on-us transactions, the transaction has not been sent to the card-issuing bank in the clearing file, or it could not be reconciled in the bank's system.
So can transactions waiting in open authorization be cancelled?
Of the credit card transactions described above, only those up to the point the POS's batch close is taken can be cancelled. All transactions at later steps cannot be cancelled -- they can only be refunded.
So how can the cardholder know whether a transaction will be handled as a cancellation or a refund?
The cardholder cannot know this on their own. The cardholder should first contact the merchant to ask whether a cancellation is possible. If the merchant cannot provide the necessary information, the cardholder should contact the card-issuing bank for details.
Can the card-issuing bank perform the cancellation?
The card-issuing bank cannot cancel the transaction. Cancellation can only be performed by the merchant.
What should the cardholder do about a transaction sitting in open authorization that they did not make themselves?
The cardholder should first contact the bank and file a dispute.