Due to how payment systems operate, authorization is obtained first for a transaction. For a Not Onus transaction (where the card-issuing bank and the POS bank are different), the system waits for the relevant transaction to arrive via the clearing incoming file.
For a Not Onus transaction to be reflected in the card's statement-period activity, it must have arrived via clearing.
So what is Open Authorization?
Open Authorization can be defined as the period for an authorized transaction between the moment of authorization and the time it reaches the card-issuing bank via the clearing file.
Does Open Authorization occur when the card-issuing bank and the POS bank are the same?
When the card-issuing bank and the POS bank are the same, there is no clearing involved, so we can say that Open Authorization does not apply either. (The time elapsed until the bank's internal end-of-day/batch operation is disregarded here.)
Is there a timeout period for a transaction pending in Open Authorization?
Yes, there is. Although there is no fixed period, the period generally used by banks is 1 week. Transactions that have been authorized but have not arrived via the clearing file are held for a certain period (usually 1 week). If the transaction has not arrived via clearing by the end of the first week, it is set to Expired status, and this transaction is not carried over to the card's statement-period transactions.
When a transaction is updated to expired status:
- The card limit is released by the amount of the transaction.
- If points were used in the transaction, the points used are refunded to the card.
- If points were earned on the transaction, the earned points are taken back.
