Authorization adjustment
What is authorization adjustment?
Authorization adjustment is a change to the amount of an existing before the merchant captures it. Raising the amount is also known as an incremental authorization; lowering it is a partial reversal.
Adjustments exist because the final payment amount isn't known at the time of the initial authorization. A hotel approves an estimate at check-in and the guest then orders room service. A shipping quote or tax figure changes after an order is placed. Rather than cancelling the approved amount and asking the to pay again, the merchant sends the new amount against the same authorization and captures once.
Key facts
- Also known as: incremental authorization (increase) or partial authorization reversal (decrease)
- Applies during: the window between authorization and
- Direction: the amount can go up or down
- Common in: hospitality, restaurants, car rentals, taxis, parking, and e-commerce where shipping or tax is calculated after checkout
- Support: varies by scheme, acquirer, and processor – not every is eligible
- Does not extend: the validity period of the original authorization
How it works
- Initial authorization – the merchant submits an estimated amount. The approves it and places a hold on the cardholder's available balance, producing an .
- The final amount changes – incidentals are added, a shipping rate is recalculated, or the order shrinks.
- Adjustment request – the merchant sends the revised amount referencing the original authorization, through its or processor.
- Issuer decision – the issuer approves the new amount or returns a . A declined increase doesn't cancel the original authorization; the first approved amount stands.
- Capture – the merchant captures the adjusted total. A decrease releases the difference back to the cardholder's available balance before capture.
Why it matters
- Capturing more than the amount the issuer approved risks rejection by the , so the increase has to be authorized first rather than applied at capture.
- A single adjusted authorization replaces the cancel-and-reauthorize cycle, which removes a second payment prompt for the cardholder and a second chance for the card to be declined.
- Lowering the authorization releases the surplus hold early, so the cardholder's available balance recovers before instead of after it.
Common issues
- No support on the processing path. Not every merchant or supports authorization adjustments. Where the acquirer or scheme doesn't allow them, the alternative is voiding and reauthorizing.
- Adjustment limits. Incremental authorizations carry limits on the total amount and on how many adjustments a single authorization accepts. The limits vary by scheme and acquirer.
- Expiry isn't reset. Adjustments do not extend the validity period of the original authorization. Once that window closes, the funds are no longer guaranteed, and a merchant that captures anyway is relying on a .
- Declined increases. An issuer can decline the increment for insufficient funds or risk reasons even though the original authorization was approved, which leaves the merchant capturing less than the amount owed.
