What is a payment capture?

Payment capture is the point at which a transaction becomes a completed payment, meaning the funds are authorized to move from the customer to the merchant.   

This happens after authorization, but it is a distinct and legally binding step. The captured amount can even be different from the authorized amount if the final transaction amount is not known when the payment is initiated. 

Because of this, it’s important for merchants to understand the specifics of payment capture and its role in the transaction process.

In this article, we explain what payment capture is, its relationship to authorization, the difference between instant and delayed payment capture, and how delayed capture helps to prevent chargebacks. 

Payment capture explained

Payment capture is the legally binding point in a card transaction where funds are moved from the customer’s account to your merchant account. After the credit card payment is captured, the payment is settled, and the transaction is completed. Capture is also the point at which fees are deducted from the pre-authorized amount. 

Payment capture can be instant and automatic or delayed if you submit requests manually in batches at the end of the business day. 

Authorization vs. payment capture

Authorization is the point in the payment process that takes place immediately before capture. They are related and both equally important but distinct steps. 

Authorization verifies the cardholder and checks with their bank that they have sufficient funds in their account to complete the transaction. If so, the bank places a hold on those funds, meaning the customers can’t spend them on anything else before capture can take place. The payment is now categorized as pending. 

Once authorized, the merchant can submit a capture request to transfer the funds from the cardholder’s account to their account. The authorization request is usually valid for a week. If you fail to capture the customer’s funds during this time, the transaction will be canceled, and they will be free to spend the money again. 

Find out more about authorize and capture.

​​Instant vs. delayed payment capture

As mentioned earlier, you can choose to capture funds automatically after authorization or you can choose to capture them manually.

Automatic capture is almost always instant, although you can set up an automated delay. Likewise, manual capture usually requires a delay because it takes time to batch and submit multiple requests. Of course, if you have the resources, you could submit instant manual requests. 

There are many good reasons to delay payment capture. Firstly, a delay gives you more time to conduct proper authorization, verifying that your customer has sufficient funds and that they are who they say they are. If there are any suspicious signals during fraud checks, you can flag the transaction for manual review, which decreases the chance that you’ll fall victim to a fraudster. 

Secondly, by conducting more comprehensive verification, you can avoid accidentally shipping goods to cardholders whose payments don’t end up being completed. This protects your inventory and revenue. 

Finally, by preventing bad transactions, you can avoid paying fees incurred by having to reverse payments or initiate chargebacks for customer funds that are already in your account.

How delayed payment capture helps prevent chargebacks

Delaying capture is a great way to prevent chargebacks. That’s because until you submit a capture request, the payment is still pending, and the funds, while on hold, remain with the customer. 

During this time, you can properly verify the customer’s funds and identity and ensure that they haven’t made a mistake with their order. If there are any issues, you can simply cancel the payment without issue. In contrast, if you capture the payment instantly and subsequently find out that there is a problem with the transaction, you’ll have to initiate a chargeback to return the funds to the customer’s account. 

Not only will you incur fees and other penalties associated with chargebacks, but if your chargeback ratio is too high, you may have to pay higher interchange fees, and you could be added to a monitoring program until you can bring it down below a particular threshold. 

However, if submitting capture requests manually, it’s important to have a proper process in place to ensure they are completed before the authorization expires and you lose sales. 

Process payments with Checkout.com

Choose Checkout.com as your online payment processing partner to derive more value from every transaction. 

Our flexible online platform allows you to tailor your payment solution to the unique needs and preferences of your business, whether you want to capture all payments manually or set up an automatic delay.  

Thanks to our robust fraud detection and prevention capabilities, you can block suspicious transactions while increasing acceptance for legitimate customers, helping you to avoid costly chargebacks. 

Find out more about payment processing with Checkout.com and speak to a member of our sales team.