A credit card authorization form serves two primary purposes: First, it gives a business the authority to charge a credit card without the buyer being physically present. Second, it prevents unwanted and fraudulent chargebacks that can hurt the relationship between a business and a merchant processor. If a business is getting too many chargebacks, its merchant provider may eventually cease to do business with them.

When a buyer and seller have come to terms for the purchase of goods or services, the consent may begin to be filled in. The following information will be required by the processor:

Credit/Debit Card

• Cardholder’s Name
• 16-Digit Number
• Expiration Date
• Billing Address

Bank Account (ACH)

• Account Holder’s Name
• Address (of the Account Holder)
• Routing Number
• Account Number

Enter whether the account will be charged for a one-time payment or continuing on a recurring basis.

The cardholder must sign the authorization form. If being used for hotel room authorization, the form may be signed by the cardholder and faxed to the lodging establishment.

Due to how easy it is to call a bank and report a fraudulent charge, there needs to be a way for merchants to minimize losses in order to protect their business. Even though businesses can dispute a chargeback, it still has a negative effect. Most businesses are allowed a dispute range of no more than 1% to 3%. If a business has a dispute ratio higher than the allowed rate, its payment processor will likely suspect the business to be practicing shady ethics.To keep the number of disputes down, many businesses will take the loss and refund the customer, which can be highly unfair to the business. Any business that sees high or unfair disputes should adopt a credit card authorization form for customers to sign anytime they can.

A credit card authorization hold works a bit differently than an authorization form in that it temporarily draws funds from the customer’s account as a pending transaction and ensures that the customer has the funds in their account to complete the purchase. The authorization hold can range from $1 to the full amount, depending on the situation.This is a common practice that gas stations and hotels widely use to prevent fraud. With websites such as Booking.com, they allow customers to reserve a hotel with no money down but after a specified date, the customer can no longer cancel without being charged for partial payment or the entire amount, which is also another example of an authorization hold.