A Credit Card Authorization Code, often referred to as an authorization approval code, is a unique alphanumeric code generated by the card issuer’s authorization system in response to a transaction request. It serves as confirmation that the transaction has been approved and allows the merchant to proceed with the sale or service.
The purpose of a Credit Card Authorization Code is to validate and authenticate a transaction in real-time. When a customer makes a purchase using a credit card, the merchant submits an authorization request to the card issuer to verify if the card has sufficient funds or credit available for the transaction. The card issuer then evaluates various factors, including the cardholder’s credit limit, account status, and transaction history, to determine whether to approve or decline the request.
Once the card issuer approves the transaction, an Authorization Code is generated and sent back to the merchant. This code acts as proof that the cardholder’s account has been authorized to be charged for the specific amount requested. The merchant records this code and includes it in the transaction details for future reference and reconciliation purposes.
The Authorization Code is essential for both the merchant and the card issuer. For the merchant, it confirms that the payment has been authorized, allowing them to proceed with providing goods or services to the customer. It also provides protection against chargebacks if the transaction is later disputed by the cardholder. For the card issuer, the code helps track and reconcile transactions, detect potential fraud, and ensure that the cardholder’s account is accurately billed.