Sunday, October 12, 2008

Single Message Authorisation/Clearing

Some financial networks operate a single message solution, in which a transaction is authorised and cleared via the same message.

A transaction will be authorised via a pre-authorisation step, where the merchant requests the issuer to reserve an amount on the cardholder's account for a specific time, followed by completion, where the merchant requests an amount blocked earlier with a pre-authorisation. This transaction flow in two steps is often used in businesses such as hotels and car rental where the final amount is not known, and the pre-authorisation is made based on an estimated amount. Completion may form part of a settlement process, typically performed at the end of the day when the day's completed transactions are submitted. All these messages will be sent "on-line" from the merchant acquirer to the issuing bank.

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