Timeline of an Authorisation

How long is an authorisation valid?

If you make a card sale via a standard authorisation (called “final authorisation) you should settle and the end of the same day.

Pre-Authorisations are valid for 30 days (MasterCard) or 31 days (Visa).

There are however exceptions, such as Maestro (7 days).

This means you can use an authorisation code received from an issuer for this period of time and still get your funds. After this period, your settlement request will fail.

How long are funds reserved?

The reservation will be used once the settlement is made.

If no settlement is made, reservations will be released much earlier than the period for which authorisations are valid. This is decided by the issuer.  Most issuers let reservations expire after 7-10 days. Some however keep a reservation for up to 21 days. 

If you settle late, you might incur late settlement fees, which can be quite expensive.

That is why using pre-authorisations are often the better way if you know you are not going to settle within this time-frame. Pre-authorisations also carry a fee, but not as much as the late settlement fee.  So:

  • A standard authorisation is the cheapest and should be used if you expect to settle immediately
  • A pre-authorisation is cheaper if you know you are not going to be able to settle immediately
  • If you don’t know when you are going to settle, you will need to analyse how often your settlement is within or outside the limit and you will have to calculate which option is most beneficial

Can you reverse a reservation on a card?

Pre-authorisations can be reversed, but final authorisations cannot.

Issuers are often prepared to reverse a reservation if they receive a letter from the merchant. You would need to furnish this to the cardholder who can present this to his bank. Not all issuers are prepared to do so though, and this is obviously a very time-consuming process.