What Is an Authorized Amount?

Authorized Amount Explained in Less Than 4 Minutes

A man uses his debit card to pay at a restaurant.
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An authorized amount is the amount of money in a customer’s bank account that a merchant may place on hold using the customer’s credit or debit card when it is presented for purchase. The merchant does this to ensure that the customer’s card is usable for the transaction.

Learn what an authorized amount is and how it can affect your ability to make purchases with your credit or debit card.

Definition and Example of an Authorized Amount

An authorized amount is the dollar amount placed on hold in your bank account when you use a credit or debit card linked to that bank account to make a purchase. The merchant does this to ensure that your card can be used to make the purchase.

  • Alternate name: Merchant authorization

For example, if you are making a credit card purchase at the grocery store for $100, the store will place a hold for $100 with your credit card issuer. In this example, the authorized amount is $100.

How Does an Authorized Amount Work?

When you make a purchase with a debit or credit card, the merchant you are purchasing from requests authorization from the card issuer to confirm that the card you are using is active and that you have the credit limit (in the case of a credit card transaction) or funds available (in the case of a debit card transaction) to complete the purchase.

After this authorization is made, your available amount to spend on your card is reduced by the authorized amount, even though the transaction has not been settled yet. The authorized amount will appear as a pending transaction in your account activity until settlement occurs.

If the merchant is unable to authorize the necessary amount, the purchase will be declined.

In most cases, the authorized amount is equal to the amount of your purchase, but there are some circumstances where these amounts may be different.

If you use a debit card and have an authorized amount placed on the account linked to your card, it may show up as a pending charge on your account history. When the amount is finalized, it will show up as a debit.

Types of Authorized Amounts

While most authorized amounts are equal to the actual amount of the purchase, it is common for the authorized amount in certain kinds of transactions to differ from the final purchase amount.

Restaurant Authorized Amount

When you pay with a debit or credit card at a restaurant, you review the receipt showing your subtotal and sales tax and then provide your card to the server or cashier to run your card for this amount.

At this point, the restaurant does not know how much you will tip, so they may authorize the amount of your subtotal plus tax plus an additional 20% tip tolerance to ensure that your card will not be declined when you add the tip amount after your card has been run.

Whether a restaurant can authorize a tip tolerance may depend on the card issuer. For example, Mastercard does not permit a tip tolerance on in-person restaurant card transactions but does permit it for card-not-present card transactions at U.S. restaurants, such as if a customer orders delivery through an app and wants to tip the driver.

Gas Station Pump Authorized Amount

When you pay with a debit or credit card at a gas station pump, there is no way for the station to know exactly how much gas you are going to pump.

As a result, some gas stations may authorize an amount as high as $100 to ensure that your card will be able to cover the transaction.

On the other hand, some gas stations simply authorize a nominal amount such as $1 just to ensure that your card is working.

The authorized amount at some merchants, such as gas stations, may stay on your account history for up to three days until the actual amount reaches your card issuer.

Hotel Authorized Amount

When you check into a hotel, the hotel may not only request authorization for the amount of your room fees and taxes but also for an estimate of any incidental fees you will incur during your stay.

Key Takeaways

  • When you use your credit or debit card to make a purchase, the merchant will place a hold for a certain amount with your card issuer in order to ensure that your card is able to be used for the transaction. This amount is known as the authorized amount.
  • The authorized amount is typically equal to the amount of your purchase, but it may be different than your final purchase amount if this amount is not known when your card is presented.
  • Restaurants, gas stations, and hotels are examples of merchants at which the authorized