Practice payment processing vocabulary: authorization, capture, settlement, chargeback, authorized but not captured, refund vs. reversal, and gateway decline codes.
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1 / 5
When a customer checks out, the gateway first requests an ___. What does this step do?
Authorization reserves the payment amount on the cardholder's account and gets approval from the issuing bank. No money moves yet — the funds are simply held. Authorization codes expire if not followed by a capture.
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After packing the order the fulfilment system sends a ___ request to collect the previously reserved funds.
Capture is the second step in a two-step payment flow. It tells the payment processor to collect the previously authorized funds. Without a capture, the authorization hold eventually expires and the customer is not charged.
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At end of day the processor runs ___ to transfer funds from issuing banks to acquiring banks.
Settlement is the batch process (often nightly) in which the payment processor and card networks move the actual funds from the cardholders' issuing banks to the merchant's acquiring bank.
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A customer disputes a charge and the bank initiates a ___. What happens to the merchant?
A chargeback is a forced reversal initiated by the cardholder's bank after a dispute. The funds are returned to the customer and debited from the merchant, plus a chargeback fee. Merchants can contest chargebacks with evidence.
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The payment log shows: 'Transaction status: authorized but not ___.' What does this mean for the customer?
'Authorized but not captured' means the payment gateway received bank approval and reserved the funds, but the merchant has not yet sent a capture request. The customer sees a pending charge but is not yet billed.