Understanding the difference between Pending and Posted charges

Pending and Posted charges often raise questions and concerns among customers in the world of payments and e-commerce. It's not uncommon for individuals to perceive these steps as a double charge, causing confusion and frustration.

We get it! Payments can sometimes be complex and layered and in this article, we will demystify Pending and Posted charges, as well as authorization and capture processes, shed light on their differences and explain the reasons behind split amounts in capture charges.

Pending vs. Posted: Clarifying the Difference

To further illustrate the distinction between these two processes, let's dive into an example:

Pending charges: When you place an order, the vendor performs an initial authorization on your payment method to ensure that the funds or credit are available to cover the purchase. This authorization holds the funds but is not an actual charge. FYI you may occasionally see Pending Transactions referred to as Authorizations.

Posted charges: The posted charge is the actual amount charged to your payment method when the order is shipped or the service is rendered. This reflects the final purchase amount, which may include adjustments for taxes, shipping, or any discounts applied. FYI you may occasionally see Posted Transactions referred to as Captures.

Why Are Pending and Posted transactions separate processes?

Before getting into the intricacies of Posted charges, let's first understand why authorization and capture processes exist as distinct entities in credit card transactions.

1. Verification of funds: Authorization serves as the initial checkpoint in the payment process. When you place an order, the vendor performs an initial authorization on your payment method to ensure that the funds or credit are available to cover the purchase. This authorization holds the funds but is not an actual charge. It's important to note that this action reserves the funds but does not yet transfer to the vendor. This precautionary measure prevents customers from unintentionally exceeding their credit limits and incurring fees or declined transactions.
   
   
2. Changes in the order: Customers can often require last-minute changes to their orders, even after they've made a purchase. Imagine what would happen if authorization and capture were intertwined – adjusting the final charge amount based on order modifications would become an arduous task. By keeping these processes separate, companies can capture the precise amount according to the final order, whether it includes additions, subtractions, or any other adjustments.
   
   
3. Stock availability: Especially with physical goods, the authorization step and reserving funds ensure that customers are not prematurely charged for items that are out of stock or stuck in backorder. It's a measure that safeguards your wallet while guaranteeing you receive what you've paid for.
   
   
4. Timing: Delays between authorization and capture may occur due to various order processing requirements, such as picking and packing items, order verification, or preparing digital products for download. The capture usually transpires when the company is confident that it can fulfill the order promptly and efficiently.

Split Capture charges: Unveiling the why

Now, let's address the burning question: why do some customers experience multiple charges instead of one single, lump-sum capture?

1. Partial Shipments: In situations where a single order comprises multiple items, companies may opt to capture and charge for each item as it gets shipped. This method allows them to bill you for the items you've already received while sparing you from paying for items that are on backorder or experiencing delays. It's a customer-centric approach that ensures you pay for what's in your hands.
   
   
2. Customized Orders: For products that require customization or additional services, businesses may opt to split the capture charges. This practice accurately reflects the cost of these supplementary services, ensuring transparency in your transaction. It also provides a clear breakdown of the expenses associated with your purchase.
   
   
3. Subscription Services: Companies offering subscription services often split authorization and capture charges to verify your card's validity at the inception of the subscription. Subsequently, they charge you periodically for subscription fees, as agreed upon in the terms of your subscription. This approach ensures that your payment information remains valid and that you have uninterrupted access to your chosen service.

Understanding the nuances of Pending and Posted charges in credit card transactions is crucial for making informed online purchases. By recognizing their separate roles and the reasons for split capture charges, you can navigate the world of e-commerce with confidence with Float!

If you have any further questions, please feel free to reach out to support@floatcard.com!