Seeking answer to credit card processing problem, one delayed capture per author
Category: Business and Money > eCommerce
Asked by: iblaine-ga
List Price: $150.00
12 Jul 2006 12:52 PDT
Expires: 11 Aug 2006 12:52 PDT
Question ID: 745689
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.
Re: Seeking answer to credit card processing problem, one delayed capture per author
Answered By: tisme-ga on 01 Aug 2006 18:57 PDT
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
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