An authorization hold is a temporary hold that freezes a cardholder’s funds or credit. It takes effect after a transaction has been approved and lasts until the transaction is finalized (settled). Funds are reserved by the card issuer and cannot be spent, but they haven’t been transferred to your merchant account yet. This hold remains in place until you finalize the transaction or the hold expires. If no action is taken, the funds are released back to the cardholder after a set period, typically 5 to 7 days. Holds are often used for delayed charges, pre-orders, or services billed after completion.

If you don’t capture a transaction promptly, you risk losing access to those funds or sustaining a chargeback. And if you tie up a cardholder’s funds for too long, they could understandably get upset.

Understanding and managing authorization holds is an important but often confusing part of payment processing — especially for industries like hospitality, rentals, and subscription trials. If you obtain your merchant account from AltoPay, our team will help you accurately collect what you’re owed without introducing compliance issues or disputes.