A pre-authorization is a temporary hold and is adjusted to the value of the items after your transaction is processed
What is a Pre-Authorization Hold?
A pre-authorization hold, also known simply as a “pre-auth,” is a temporary amount held on a credit card to verify that it has sufficient funds available for the purchase. This hold is not an actual charge but a pending transaction that ensures the payment method is valid and that funds are reserved for the purchase.
When is the Pre-Authorization done?
To unlock the door of the Smart Store, a temporary hold is placed on your card to validate it prior to granting access. Once authorized, the door will unlock, and you can grab as many items as you’d like. The temporary hold will then be adjusted, and you’ll only be charged for the items you’ve taken.
Example: You tap your credit card to unlock the Smart Store. You will immediately see a pre-auth hold or "pending" line item on your card statement. You then grab a bag of chips totaling $2.39 and close the door. Once the Micromart system has processed your order, the pre-auth/pending line item is removed, and you are charged $2.39. You also receive a receipt via SMS for $2.39.
Why is a Pre-Authorization Hold required?
Compared to a traditional vending machine or retail store, where the customer pre-selects their items before "checking out," a Smart Store authorizes access to the merchandise and then charges the customer afterward for the items they've selected. A pre-authorization hold is placed to validate that the customer has sufficient funds for the purchase.
For example, at a gas station, a hold is placed on your card before you’re allowed to pump gas into your vehicle. You’re charged later for the amount that you actually put into your car.
It is important to note that pre-authorizations are a mandatory requirement by credit card providers for unattended transactions involving the sale of food and beverages.