A credit card authorization form is permission obtained from a customer to conduct a transaction using their card. It is typically the first step in purchasing goods or services. Authorization can be given for a one-time transaction or recurring charges.
In this article, you will learn what a credit card authorization form is, how to fill it in, and where to get a template for free.
A credit card authorization form is needed when a customer buys anything in the store, regardless of whether online or offline. They present their credit card information (by swiping magnetic stripes, using digital wallets, using payment gateways, etc.), and then, this information is sent to a processor — an entity that communicates with a customer’s bank (issuer) through certain networks (Mastercard, Paypal, etc.). After that, the bank has a choice of either approving or denying a payment. If the payment is approved, the approval is sent back to the payment processor, and then to the terminal or card reader.
For any business, there is a certain risk that there might be a chargeback or another issue with the customer’s payment. A credit card authorization form is what can protect a seller from those risks. A seller can ask a customer to sign this document, which allows the first to charge the customer’s card for a period of time mentioned in the document.
Let’s imagine a café that caters lunches for a business in the area. There is no need for the café to charge money from the local business every time they call for delivery as it would be quite burdensome. They might decide to request the local business to sign authorization forms. This way both the local business and café do not have to negotiate every time what form of payment the local business would want to use or request their signature after every order. With authorization forms in place, the café can charge the delivery to the business’s card without any extra effort.
Another case might be the usage of authorization forms by a company leasing expensive equipment. If the equipment is of high value and the leasing company wants to protect themselves from damages, they might use a credit card authorization form to put a hold on a card every time customers lease their items until they are returned.
A credit card authorization form is an option for different types of businesses — those that charge customers for their services or goods on a recurring basis and those that give customers the ability to make a deposit for the future purchase of goods or services.
The first crucial thing that a credit card authorization form gives to businesses is that they are authorized to charge a credit card without customers being physically present at the moment of payment. Another unbeatable benefit for a seller is that a credit card authorization form helps prevent chargeback frauds, that is when a consumer makes an online purchase with their credit card, and then requests a chargeback from the bank issuer after receiving the purchased goods or services. For any business, a chargeback is a sort of issue as when a customer disputes the funds they paid to a business, these funds might be held from the business until the bank-issuer decides what to do. As a result, chargebacks take a lot of time and require filling in a lot of papers.
With a credit card authorization form, a business is authorized to charge a customer at regular or irregular intervals. When a seller has the signed document in place, they get legal permission to charge the customer’s card for services, and they have higher chances of winning the case with the bank issuer in case of any disputes.
Credit card authorization forms are a savior for those businesses that conduct recurring payments. For them, the document plays two important roles: eliminates the risk of customers claiming they never gave consent to being charged and saves time on filling in credit card information for every single payment.
Typical authorization forms will include:
The process of charging a credit card or bank account of a customer is fairly simple, especially if you choose to use the ready-made forms provided on our website. All you have to do is download a free form and then fill in the information according to our simple instructions.
Step 1 — Get the customer’s and account information
When both the buyer and seller have agreed on the terms of the purchase, written consent can be filled in. The information included in the form should be sufficient for a payment processor and usually includes the name of the customer, card number, date of expiration, and billing address.
Step 2 — Choose the type
A credit card authorization form should explicitly tell whether funds can be charged only once or on a recurring basis.
Step 3 — Obtain the signature of a customer
Finally, the form should be signed by a customer.
Step 1 — The type of form
The document typically offers a customer to choose one of the types of authorization that they should mark. The first option is a one-time authorization. In this case, the document should include the language that would tell that a customer will be charged only once to the credit card they will specify in the form. They should be told that the permission is given for a single payment only and does not authorize the seller for any additional debits or credits to their bank account.
If a customer chooses a recurring charge option, they should be told that they are authorizing regularly scheduled charges with the receipt being provided for every charge to their credit card billing statement. The document should also state that no prior notification of charge will be provided unless there will be changes to the terms of charges. A customer should also know from the document that in case of changes, they will get a notification a certain time before the changes will be brought.
Step 2 — Information about the parties, customer’s credit card, and transaction
After a customer is aware of the type of authorization, they should include their full name and the name of the seller that is authorized to charge money. Then, there should be the amount of transaction in dollars and the date of charging. In the case of recurring charges, the frequency of charges and the date when they will be made should be indicated. After that, there should be specifications of goods or services provided.
An authorization hold is a situation where funds are put on hold after the request of a seller, and the authorization is considered pending. Essentially, money for a particular payment is temporarily locked, and a seller can be sure they will get paid for the purchase of a good or service via debit or credit card. This is an easy and smart way for a seller to protect themselves from chargeback abuse and unnecessary refunds.
All legal payments require getting permission from the customer, but it is not necessary for every single payment. Customers’ permission might be obtained in different ways, but oftentimes, a signature is considered sufficient authorization.