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This is presumably an actually hard problem despite the comments. A pre-auth allows the acquiring merchant to capture that authorization and charge you. Sometim
by iancarroll 7y ago
This is presumably an actually hard problem despite the comments. A pre-auth allows the acquiring merchant to capture that authorization and charge you. Sometimes these can be for $1 or more, depending on how aggressive the service is. Pre-authorizations are subtracted from your available credit/balance.
If the card approves the pre-auth, they are (presumably, AFAIK) on the hook for that $1 if the merchant captures the pre-auth. If many (unpaying?) users start charging you $1...
- rahimnathwani 7y agoA reasonable heuristic might be: - if less than 0.05, approve (as no merchant would actually charge a transaction for that amount, as they'd spend more than 5 cents on fees) - if more than 5 cents but less than 1 USD, approve it only if the merchant is already known to offer free trials You could be fancier: - match on amount+merchantID combo, not just merchantID - learn a model to deal with previously-unseen merchants
- londons_explore 7y agoI'd guess they allow small pre-auths (up to $3 say), and then keep a blacklist of merchants who actually capture the charge. Merchants on the blacklist have all charges denied. Any 'free trial' who actually captures a dollar from their clients will cause lots of chargebacks from their customers, so would go out of business quickly... (A chargeback costs a business ~$15 in fees)