What are authorization fees?

Each time a customer attempts to verify their credit card information, an authorization charge is incurred. Such fees are applied whether the transaction is approved or declined, as they cover the cost of initiating the authorization process with the cardholder’s bank.

Authorization fees aim to compensate the card brands (Visa, Mastercard, Discover, Amex) for checking the validity of the card and confirming the availability of funds. This step is essential to reduce fraud and ensure the transaction can proceed.

You are charged an authorization fee for every authorization attempt. This includes both successful and unsuccessful transactions, such as declined cards or errors during processing. The reason is that the charge is for the “check” done on the card, not for the transaction itself.

Authorization fees are usually a very low fixed amount per transaction, often less than $0.25. 

On your merchant statement, these fees may appear under different labels, including:

•    Per Transaction Fee
•    Per Item Fee
•    Transaction Fee

Below is an example image of what this section may look like on your merchant statement:

In rare cases where electronic authorization is unavailable, you may need to call in for manual approval. This process incurs a separate Voice Authorization Fee, which is typically higher due to the manual effort involved. For more information, check out our dedicated FAQ below.