Zero-value authorization

Zero-value authorization, also known as zero-amount authorization or pre-authorization, is a practice in electronic payments where a nominal or zero-value transaction is temporarily processed to verify the validity of a payment card before the actual purchase or service usage.

During this type of

authorization

, no funds are deducted from the

cardholder

's account. Instead, the primary purpose is to conduct a preliminary check, confirming that the payment card is active and possesses sufficient credit or funds. This precautionary measure is particularly valuable in industries such as hospitality and car rentals, where services are reserved before the final payment is made.

This practice helps mitigate the risk of

fraudulent transactions

and offers reassurance to merchants, providing an extra layer of confidence that the payment method being used is legitimate and reliable.

As the electronic payment landscape continues to evolve, the strategic use of zero-value authorizations contributes to enhanced security and trust in transactions, benefiting both merchants and consumers alike. The approach aligns with the broader industry efforts to strike a balance between facilitating seamless transactions and implementing robust security measures.