What is card authorisation and how does it work?

Debit cards are among the country’s favourite payment methods. In fact, half of all payments in the UK in 2022 were made with a debit card.¹

Demystifying debit card authorisation

At a basic level, debit card authorisation is a screening process. It’s how a merchant checks a card with the bank that provided it. By doing this, the merchant can find out if the card is active and if it has funds (or credit) for the transaction.

Debit card authorisation is crucial for fraud prevention because it also confirms that cards are being used by their rightful owners.

People should also ensure transactions require authentication when making payments. This may involve entering PINs or using passkeys or fingerprint scans.

These extra steps may help safeguard funds against unauthorised access or theft.

How debit card authorisation works

Let’s break down the process of debit card authorisation. Here are the methods and steps:

• Merchant request. The merchant — say a shop or subscription service — starts the authorisation by requesting a temporary hold on funds for the transaction amount.

• Bank confirmation. The bank verifies the availability of funds. Then it approves or denies the transaction, which sends a confirmation back to the merchant.

People can authorise debit card payments in several ways:

• Chip and PIN. In a shop, the cardholder inserts their chip card and enters a PIN to authorise the payment.

• Contactless payments. A quick tap of a card or smartphone on a reader completes the authorisation without needing a PIN. Contactless payments are usually only available for amounts up to £100.

• Online transactions. Authorisation may require entering card details and security information like a password or a code sent to the cardholder’s authentication app.

Here is how card authorisation works with PayPal. When people authorise a payment to a merchant, their PayPal account will show a pending authorisation. This is because PayPal has placed a temporary hold on the money. The recipient can’t use or withdraw this money until the authorisation is complete.

Protecting debit cards: Recognising safe payment forms

To protect debit cards and recognise safe payment forms, it's important to always ensure that the website uses HTTPS encryption and displays familiar branding from trusted retailers. Consider these points:

• It's good practice to be cautious of unfamiliar websites, unusual payment requests, or forms that lack security certificates, as these are potential red flags for fraudulent activity.

• The PayPal app allows people to checkout privately, enroll for alerts on potential card fraud attempts, and set up a passkey for simple and secure login. PayPal also encrypts card information to keep transactions secure.

How to confirm a successful debit card authorisation

Banks notify customers of successful debit card authorisations through various methods. Customers may receive instant notifications via text, email, or through their banking app once a transaction is authorised.

It's helpful to keep in mind that authorisation holds may take some time to be released by the bank. Unsuccessful authorisations will cause declined payments.

Discover PayPal’s solutions

It is possible to make payments without needing the above authorisation process. PayPal’s digital wallet provides an alternative payment method that may bypass traditional debit card authorisation procedures. For example, virtual debit cards — with advanced digital wallet security — may be used and can improve the authorisation experience.