Seeking answer to credit card processing problem, one delayed capture
per authorization.

How does Amazon or a drop shipping company navigate the problem of
being able to do only one delayed capture per authorization on a
credit card?

This situation is this.  For a drop shipping company, orders are
shipped from different locations on different days.  A customers card
is charged only when an item ships.  Upon placing an order, an
authorization is done for the full amount of the order.  For the first
item shipped, a delayed capture can be done against the authorization.
 The problem is only one delayed capture is allowed per authorization.
 All subsequent shipped items must be new charges.

How is it that a drop shipping company, like Amazon, is able to
navigate this limitation of only one delayed capture per
authorization?

Here are potential solutions with problems.  Multiple authorizations
can be generated when an order is intially placed however this will
create problems when a customers card is overdrawn.  Charges can be
queued up and one delayed capture can be generated just before the
authorization expires however this requires that all items ship before
the authorization expires.  A delayed capture can be generated for the
full amount of the authorization and creditds can be given for items
not shipped but this seems inefficient and confusing to a customer.  A
3rd party like Paypal or Google Checkout allows muptiple DCs per auth
but that requires users have the necessary accounts.

Hello iblaine,

What happens is that they do an authorization transaction for the full
amount, and then they capture the funds for the first partial
shipment. The remaining shipments are sent out through new sales
transactions REFERENCING the initial authorization.

I found the answer on the University of Pennsylvania website in a
VeriSign Payment Services Manager User Guide:

On page 77 of the PDF file, the example that they give is that an
amount of $100 is authorized for a shipment and $66 is charged
immediately for the first partial shipment using a normal delayed
capture transaction. The final $34 is charged using a reference
transaction to the initial authorization (a new sale, but not a new
authorization).

SOURCE: http://www.finance.upenn.edu/forms/verisign_docs/Manager_Guide.pdf

A similar PDF from Paypal on Payflow Pro also mentions the reference
system. ?In the case of a split shipment, you can perform a Delayed
Capture transaction for the initial shipment and a reference
transaction for the final payment? (page 23).
https://www.paypal.com/en_US/pdf/PayflowPro_Guide.pdf

On page 34, they mention that the only problem is if the merchant
performs a delayed capture transaction for an amount higher than the
original Authorization amount, in which case the merchant will be
charged for an extra transaction AND the persons credit card
open-to-buy balance will be reduced by the sum of both the original
Authorization-only amounts and the final Delayed Capture amount.

A complete discussion using the PayFlow Pro system (also used by
PayPal) can be found here:
http://www.verisign.com/support/payflow/manager/selfHelp/transReference.html
(This is similar to the guide from upenn.edu).

So basically, while there can only be one delayed capture transaction,
it is still possible to reference the initial authorization in further
sale transactions thus not increasing the users available balance
beyond the initial authorization.

Please let me know if you require clarification and I will do my best
to further assist you,

All the best,

tisme-ga