Using Authorization & Capture

PayPal Authorization & Capture is a settlement solution that provides increased flexibility in obtaining payments from buyers. During a traditional sale at PayPal, the authorization and capture action is completed simultaneously. PayPal Authorization & Capture separates the authorization of payment from the capture of the authorized payment.

Authorization & Capture is for merchants who have a delayed order fulfillment process and who typically make a $1 USD authorization at checkout. It enables merchants to modify the original authorization amount due to order changes (such as taxes, shipping, or item availability) that occur after the buyers place the initial order. This chapter discusses the authorization and capture process and provides steps to help you authorize, capture, reauthorize, and void funds.

There are two ways to use Authorization & Capture:

  • Capture or void authorizations on the PayPal website (www.paypal.com).
  • Use the Authorization & Capture API in programming code.

Basic Authorization Process

Authorization & Capture starts when your buyer authorizes a payment amount during checkout.

  1. For example, you can send your buyer through the Website Payments payment flow, passing in the paymentaction variable set to authorization or order.
  2. After your buyer completes checkout, you can then use the payment's transaction ID with Authorization & Capture in the PayPal website (https://www.paypal.com). You can:
    • Capture either a partial amount or the full authorization amount.
    • Authorize a higher amount, up to 115% of the originally authorized amount (not to exceed an increase of $75 USD).
    • Void a previous authorization.

Honor Period and Authorization Period

When your buyer approves an authorization, the buyer's balance can be placed on hold for a 29-day period to ensure the availability of the authorization amount for capture. You can reauthorize a transaction only once, up to 115% of the originally authorized amount (not to exceed an increase of $75 USD).

After a successful authorization (or reauthorization), PayPal will honor authorized funds for three days, but PayPal cannot ensure that 100% of the funds will be available. A day is defined as the start of the calendar day on which the authorization or reauthorization was made (from 12AM PST to 11:59PM PST).

You can settle without a reauthorization from day 4 to day 29 of the authorization period, but PayPal cannot ensure that 100% of the funds will be available after the three-day honor period. However, PayPal will not allow you to capture funds if the buyer's account is restricted, locked, or a fraudulent case occurs, or if your account has a high restriction level. You can use Authorization & Capture only when your account has a low restriction level.

The honor period and authorization period for authorizations are described below:

  • If you attempt to capture funds outside the honor period, PayPal applies best efforts to capture funds. However, funds may not be available at that time.
  • The accounts of buyers and merchants cannot be closed if there is a pending (unsettled) authorization.

Supported PayPal Payment Products

You can use Authorization & Capture with the PayPal products listed in the PayPal Products Supporting Authorization & Capture table.

By default, these products assume that a transaction is a final sale. You must explicitly specify that a transaction is a basic or order authorization.

Note: You must capture and void orders and order authorizations using the Authorization & Capture APIs. That is, you cannot process order authorizations on the PayPal website (https://www.paypal.com). The PayPal website supports processing only basic authorizations, not order authorizations.
Table 1. PayPal Products Supporting Authorization & Capture
Product Typical Usage
Website Payments paymentaction="authorization"
Buy Now paymentaction="authorization"
Donations paymentaction="authorization"
Shopping carts paymentaction="authorization"

Basic Authorization & Capture Scenarios

Included here are examples of some common scenarios you might encounter when implementing basic authorizations and captures.

Capturing A Single Authorization

If you have authorized a transaction, you need to capture the funds in order to receive payment.

Note: PayPal recommends that you capture payments within three days of the original authorization.

To initiate a capture:

  1. Log in to your PayPal account at https://www.paypal.com.
  2. Click the History subtab.
    The History page appears.
  3. Find the payment transaction you want to capture and click the Capture button associated with the transaction.
    The Capture Funds page appears.


  4. Review the information, enter the amount to capture, and then click the Capture Funds button.
    The funds are transferred to your account.

Batch Capturing Multiple Authorizations

On https://www.paypal.com, you can initiate the capture of an entire group of authorized transactions at the same time. This feature is known as batch capture.

To capture a batch of authorized transactions:

  1. Log in to your PayPal account at https://www.paypal.com.
  2. Click the History subtab.
    The History page appears.
  3. Click the Capture button associated with any transaction.
    The Capture Funds page appears.


  4. Click the Batch Capture link that is located in the introductory paragraph.


  5. On the displayed page, either use the dropdown menu to choose a defined date or date range, or enter a specific date range in the provided fields.


  6. On the displayed page, check the authorizations you want to capture, set their capture amount, choose whether you will make an additional capture later, and optionally enter a note to the buyer.


  7. Review the capture transactions, make any desired changes, and submit them for processing.

Voiding an Authorization

If you initiated an authorization and now want to refund the buyer, you need to void the authorization. Once you void an authorization, you cannot capture any funds associated with the authorization, and the funds are returned to the buyer.

Note: Voiding an authorization cancels the entire open amount.

You can initiate a void in the following cases:

  • The authorization is pending
  • The authorized amount was captured at less than 100%

To void an authorization:

  1. Click the Void button associated with the authorization.
  2. Confirm the void details on the Void Authorization page, and then click the Void button.
    Note: PayPal recommends that you explain any unique circumstance to your buyer in the Note field.

    PayPal sends the buyer an email with the details of the voided authorization.

Capture Within 3 Days

  1. Your buyer orders a camera from your website.
  2. Your buyer enters payment information and authorizes payment.
  3. Send your buyer to PayPal using a hosted flow, specifying the variable paymentaction=authorization
  4. PayPal initiates the authorization.
  5. On day 3, you ship the camera and capture funds.

After you have captured funds, your Transaction Details shows the transaction with a Completed status.



Capture From 4 - 29 Days

  1. Your buyer orders a DVD player from your website.
  2. Send your buyer to PayPal using a hosted flow, specifying the variable paymentaction=authorization.
  3. Your buyer enters payment information and authorizes payment.
  4. PayPal initiates the authorization.
  5. The DVD player is discontinued. You order a different DVD player from your vendor and notify your buyer of the change.
  6. On day 14, the DVD player arrives from your vendor. Because the honor period has passed, you complete a reauthorization for payment.You ship the DVD player and complete the final capture.

Your Transaction Details shows that the transaction has been completed.

Figure 1. Transaction Details – Reauthorization, Final Capture


One Authorization, Multiple Captures, and a Refund

  1. Your buyer orders two textbooks and a keyboard from your website.
  2. Your buyer enters payment information and authorizes payment.
  3. Send your buyer to PayPal using a hosted flow, specifying the variable paymentaction=authorization.
  4. PayPal initiates the authorization.
  5. One textbook and the keyboard are out of stock. You order additional inventory from your vendors. You ship the in-stock textbook and capture the first partial capture on day 6.
  6. You receive the second textbook from the vendor. You ship the textbook and capture the second partial capture on day 11.
  7. You receive the keyboard from the vendor. You reauthorize for payment on day 19.
  8. Your buyer files a complaint that the textbook from the first shipment is damaged. You issue a partial refund for the first capture.

Your Transaction Details shows the following:

Figure 2. Transaction Details – Partial Capture, Reauthorization, Refund


Lower Capture Amount

  1. Your buyer orders a laser printer and a USB cable from your website.
  2. Your buyer enters payment information and authorizes payment.
  3. Send your buyer to PayPal using a hosted flow, specifying the variable paymentaction=authorization.
  4. PayPal initiates the authorization.
  5. Before you process the transaction, your buyer contacts you and requests to cancel the USB cable from the order.
  6. On day 6, you ship the laser printer and complete a partial capture for an amount less than the original authorization amount.
  7. You complete a void on the funds remaining on the authorization.

Your Transaction Details shows the following:

Figure 3. Transaction Details – Partial Capture, Voided Transaction


Capture Up to 115%

  1. Your buyer places an order from your website.
  2. Your buyer enters payment information and authorizes payment.
  3. Send your buyer to PayPal using a hosted flow, specifying the variable paymentaction=authorization.
  4. PayPal initiates the authorization.
  5. You add shipping charges to the order and capture funds on day 1.

Your Transaction Details shows the completed transaction. The capture results in a total not greater than 115% of the original authorization.

Figure 4. Transaction Details – Capture up to 115%


Authorization Expires

  1. Your buyer orders a desktop computer from your website.
  2. Your buyer enters payment information and authorizes payment.
  3. Send your buyer to PayPal using a hosted flow, specifying the variable paymentaction=authorization.
  4. PayPal initiates the authorization.
  5. Before you process the transaction, your buyer contacts you to cancel the order.
  6. You do not capture funds for the transaction.
  7. The authorization expires.

Your Transaction Details shows the authorization with an Expired status.

Figure 5. Transaction Details – Expired Authorization


Void

  1. Your buyer orders a stereo system from your website.
  2. Your buyer enters payment information and authorizes payment.
  3. Send your buyer to PayPal using a hosted flow, specifying the variable paymentaction=authorization.
  4. PayPal initiates the authorization.
  5. Before you process the transaction, your buyer contacts you to cancel the order.
  6. You void the transaction.

Your History shows the transaction with a Voided status.

Figure 6. History – Voided Transaction


Reattempted Capture

  1. Your buyer orders two sweatshirts from your website.
  2. Your buyer enters payment information and authorizes payment.
  3. Send your buyer to PayPal using a hosted flow, specifying the variable paymentaction=authorization.
  4. PayPal initiates the authorization.
  5. On day 3, you attempt to capture funds, but the capture fails. You receive an error message similar to the following:
    We are sorry, we cannot process the settlement at this time.
    

    There was a restriction on the buyer's account.

  6. You contact the buyer to resolve the problem.
  7. Your buyer resolves the account problem.
  8. You reattempt and successfully capture funds. You ship the order to your buyer.
Note: The reauthorization scenario is similar to the Reattempted Capture scenario, as detailed above.

Recommendations for Best Use of Authorization & Capture

Here are recommendations to ensure the best experience for buyers and to get the most from Authorization & Capture.

Capturing Funds on Basic Authorizations

PayPal recommends that you capture funds within the honor period of three days because PayPal will honor the funds for a 3-day period after the basic authorization. If you attempt to capture funds after the 3-day period and the authorization fails, your request to capture funds may be declined.

After day 4 of the authorization period, you can initiate a reauthorization, which will start a new 3-day honor period. However, it will not extend the original authorization period past 29 days. For example, if you successfully complete a reauthorization on day 29 of the authorization period, funds will only be honored until the end of the 29th day, and a new 3-day honor period will start but not extend beyond day 29.

You should capture funds within 24 hours after you ship your buyer's order.

Buyer Approval for Basic Authorizations

A buyer-initiated authorization allows you to capture funds from the buyer's account up to 115% of the originally authorized amount (not to exceed an increase of $75 USD) and up to $10,000 USD.

TipImportant: If you want to update any details of the purchase that change the original authorization amount, PayPal requires that you obtain consent from the buyer at the time of purchase or at the time of capture.

Voiding Basic Authorizations

You should void an authorization if the authorization or reauthorization will not be used. Voiding the authorization unlocks the temporary hold placed on your buyer's funding sources.