Credit Card Glossary: Terms and Definitions
Authorization is an important concept for both credit cardholders and credit card merchant accounts. Every retailer has a purchase limit above which they must seek authorization from the card issuer before they can complete the sale. Such authorization can be done by telephone or electronically at the cash register. Authorization is used to control credit card fraud.
Authorization is also the first step in processing a credit card. After a merchant swipes the card, the data is submitted to merchant’s bank, called an acquirer, to request authorization for the sale. The acquirer then routes the request to the card-issuing bank, where it is authorized or denied, and the merchant is allowed to process the sale.