Preauthorizations

Secure customer funds and reduce chargeback risks by placing a hold on credit card transactions before finalizing payment.

What is a Credit Card Preauthorization?

A preauthorization (or “preauth”) is a temporary hold placed on a customer’s credit card for a specified amount before the actual charge is captured. It allows you to verify available funds and secure payment before capturing (charging) the amount.

This is especially useful when:

• The final amount may vary (e.g., due to added items or services)

• You want to confirm card validity and customer commitment

• You prefer to delay charging until service or delivery is complete

Once the transaction is confirmed, the preauthorized amount can be captured in full or partially, depending on your final invoicing.

What Happens After a Preauthorization?

Once a transaction is preauthorized, you have two options:

• Charge the transaction (capture the funds):
  You can charge the same amount or a lower amount than originally authorized. If you attempt to charge more than the preauthorized amount, there is a risk that the additional funds will not be available on the customer's card, as only the original amount was reserved.

• Release the preauthorization:
  If the transaction is canceled or no longer needed, you can release the hold. This cancels the preauth and returns the funds to the customer’s card.

How to Use Preauthorizations in Cashflow.io

You can use the preauthorization feature with the following receivable tools:

1. Payment Requests

When creating a payment request, select the Request Preauth option instead of charging the card immediately.  Learn how to create a payment request

2. Manual Payments

When creating a manual credit card transaction, choose the Preauthorize option instead of capturing the payment upfront. Learn how to process a manual payment

You can return to the Receivables History to charge or release the transaction as needed.

Status Indicators for Preauthorized Transactions

Cashflow.io displays the following statuses to help you track the transaction:

Preauth – The hold has been successfully placed on the card, but no funds have been charged yet.

Paid – The preauthorized transaction has been charged and funds successfully received.

Released – The preauthorization was released and no funds were collected.

Additional Notes

• Preauth holds generally expire within 30 days, depending on the customer’s card issuer and the processor.

• You should charge or release the transaction within that window to ensure proper settlement.

• Once charged, the funds are transferred and the transaction is complete. If released, the hold is lifted and no funds are collected.