Article Link: http://help.truecommerce.com/en/articles/4857297-nexternal-credit-card-authorization-options
Credit card authorization settings are managed at Settings / Compatible Software / Payment Gateways / Preferences / Authorization Preferences. Here, a merchant must select which action should be taken with regard to credit card payments at the time the order is placed. They may select from "Validate and Authorize", "Validate Only", or "Validate, Authorize and Charge".
Most of our merchants use the setting "Validate and Authorize". This means that as the order is being placed, the credit card will be checked to ensure it is a valid number, and the funds will be authorized, meaning that they will be reserved for payment on this order for a period of time (period of time varies by card issuer). If you select "Validate and Authorize", if the authorization attempt returns a status of declined, the customer is asked to remedy the problem before the order can be completed. If the customer does not remedy the problem, the order never lands in the OMS. If the authorization attempt returns a status of error, the order is completed, and will show up in your OMS as "Unbilled", without authorization.
Note that under this setting, although funds are authorized, they will not be captured and received by the merchant until the merchant takes an extra manual step to capture them. Most merchants select this setting to allow time to review orders for proper discounting, inventory availability, and other factors before charging the credit card, thereby reducing credit card charge modifications and refunds.
"Validate, Authorize and Charge" follows the same rules set forth above for "Validate and Authorize", except it also captures the funds immediately as the order is being placed, eliminating the extra step to capture the funds.
In both cases, if the card information is incorrect, the order will not land in the OMS and the customer will get a notification on their screen that the order has not been placed.
"Validate Only" means that the credit card number will be checked to ensure that it is a valid number. While this setting ensures a valid credit card number, it does not ensure that the funds are or will be available for capture. Because the funds will not be authorized, the risk of a later decline is higher than if the funds were authorized and held for payment.
As stated above, if the authorization attempt returns a status of error (vs "declined"), the order is completed, and will show up in your OMS as "Unbilled", without authorization. An "error" will happen, for example, when a card is being reviewed by the processor for fraud, or when for some reason the processor cannot communicate with Nexternal when the order is being placed, or when there is an indicated invalid configuration with the processor.
The system is built to allow these error orders to land in the OMS so that the merchant can see the activity. Unbilled orders are clearly marked, and because these orders show up, the merchant has an opportunity to "save the sale" by reaching out to the customer. If a merchant does not wish to do this, it is simple to cancel an order with the order status pulldown.
Especially in the case of invalid configuration with the processor, these are likely legitimate orders that simply couldn't be processed at the time they were placed because there's an issue with the integration (maybe bad credentials, maybe bad settings on the processing side, for example.)
The Authorization Amount field allows you to choose the amount to authorize upon order placement.
The Order Total option is appropriate in most cases. This option authorizes the exact amount of the order, in anticipation of later capturing that same amount.
The Order Total Plus options allow you to authorize the Order Total, plus either a flat amount or a percentage amount. These options are appropriate if there is a reasonable probability that the order total might increase before capture. This is particularly likely if there is a To Be Determined (TBD) amount in the order at the time of checkout; thus you have the option to authorize the higher amount only in TBD scenarios if you wish. (If you wish to use this option to charge a fee for credit card use, please see this article.)
The Flat Amount option allows you to authorize a fixed amount for every order, regardless of the Order Total. This option is appropriate if you are using authorizations only to test the validity of credit cards, and not as a basis for future fund capture. Note that authorizing less than the order amount could lead to a higher decline rate upon capture.
Please note that we recommend that you require the CVV number in almost all cases. For more information please see this article.
We also recommend that you never set the Maximum Attempts below 3, which is the default. If Validation is in use (via the Authorization Preferences field), the Maximum Attempts field allows you to limit the number of declined authorization attempts allowed per order attempt. If a customer exceeds the limit, the customer is forced to return to your home page, and must start the ordering process anew. This feature discourages bots and people who traffic in stolen credit cards from attempting to "test" credit card numbers in your Online Store until they find one that works.