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When Visa mandated, in April 2024, that the ability to partially authorize payments would be required for all Account Funding Transactions, it put partial authorizations in the spotlight.
And rightly so. The ability to avoid missing out on a sale because of insufficient customer funds – and thereby boost their satisfaction with, and loyalty to, your brand – is a useful one to have.
But what are partial authorizations, exactly – and what else can they do for your business?
Let’s take a look.
What are partial authorizations?
Partial authorization enables you, as a merchant, to avoid losing out on important sales and revenue when your customer lacks sufficient funds to complete a purchase with your business.
Picture, as an example, a customer who is attempting to buy something from your business worth $100 – but, because of an overpriced coffee they forget they’d bought, has only $95 in their account. Usually, you’d simply have to decline the sale – an outcome that’s not only embarrassing for your customer, but reflects badly on your payment acceptance rates, too.
What partial authorizations do instead is allow you to partially authorize the payment – in our example, for the $95 the customer has in their account – and then complete the transaction via another payment method. The customer might, for instance, remember that scrunched up $5 bill in their back pocket, or choose to finish the purchase with a different debit or credit card.
It’s a similar story if your business accepts Buy Now, Pay Later (BNPL) payments. Let’s say your customer has agreed to pay for their $100 purchase in ten $10/month payments. One month, however, they’re a little short, and only have $5 in their bank account.
In this case, partial authorization would allow you to accept $5 rather than nothing at all. This helpful, in the short-term, for your business’s cash flow; and, as we’ll see, for a whole host of other reasons, too. By enabling the customer to complete the transaction they started (rather than declining it, and having the awkward discussion that comes next) partial authorizations represent a smooth, seamless experience for your customers – and your business.
Read more: How does Buy Now, Pay Later (BNPL) work for merchants?
Benefits of partial authorizations
Whether you’re looking to cut costs, curtail chargebacks, or find more consistency in your BNPL payments, partial authorizations offer a plethora of benefits for your business.
We’ll explore them all, below.
Enabling a better customer experience
As a merchant, you can be forgiven for thinking of declined transactions in terms that are purely – well, transactional. That is, how they affect your acceptance rates and, ultimately, your bottom line. But what about the impact a declined transaction has on your customer?
With partial authorizations, you can prevent any customer discomfort or inconvenience at the checkout by allowing them to complete the transaction – even if their initial attempt is unsuccessful. Boosting the payment experience in this way leads to customers who are more satisfied) and more loyal.
Boosting your acceptance rates
It’s easy to see why payment acceptance rates are so important. If your payments fail, you have no money coming into your account to pay suppliers, buy inventory, or grow your business. When that starts to happen, it’s not long before your business is in the red – or worse.
Plus, think of all the time – and money – you or your customer service team spend dealing with failed payment-related follow-ups and issues. Or the customers that abandon their cart when their payment on your site fails. Or the customer that jumps ship to a competitor because your payment processing is clunky or ineffective.
Through this lens, optimizing your payment acceptance rates isn’t merely a part of your business. It is your business; and here’s where partial authorization comes in.
One of partial authorization’s key benefits is that, by approving transactions that would otherwise have been declined due to insufficient funds, you give your acceptance rates a handy leg-up. More effective payment processing lowers your operational costs, safeguards your sales, and preserves a vital competitive advantage vis a vis your rivals. Which makes partial authorization – for any merchant; and for this reason alone – worth its weight in gold.
How Checkout.com supports partial authorization
We dived into Checkout.com data to look at the most common reason for failed payments. The answer – across all scenarios and payment flows – was unanimous: insufficient funds.
Yet as we’ve discussed, insufficient funds (or 20051s, if you already accept payments with us) don’t have to be the resource drain that they used to be. Instead, partial authorizations enable you to turn that waste of your business’s time and resources into a lever of growth: then pull it to cut costs, fight fraud, and raise your rates of payment acceptance and customer satisfaction.
So why wait? With Checkout.com, partial authorization costs nothing, and – especially if your business handles a lot of AFTs, such as topping up prepaid card accounts or funding person-to-person (P2P) money transfers – helps you stay compliant with card scheme rules.
To learn more, get in touch with the Checkout.com team today to discuss partial authorizations in more detail – and how they, and we, can meet your business’s unique payment needs.
