Organizations that process credit card transactions through NetSuite will be pleased to learn of an enhancement with the release of update 2016.2.  The new feature allows for credit card authorizations to be voided directly within the system by either closing or canceling the related Sales Order. Prior to 2016.2, users were required to login to their payment gateway account to void an authorization.

What is Credit Card Pre-Authorization?

In this article, the terms authorization and pre-authorization are used interchangeably to refer to a temporary hold placed on funds, without actually processing a charge to the card. This authorization ensures that a buyer has sufficient funds or credit in their account to cover the amount of the purchase.

For the duration of the pre-authorization, the funds are “reserved”, meaning that the cardholder cannot spend this money elsewhere or allocate the credit to another transaction.  If the merchant does not “capture” or settle the transaction within a set number of days (which will differ per merchant), the pre-authorization hold will expire and no funds will change hands.

Why Should I Use Credit Card Pre-Authorization?

Businesses are not required to authorize cards prior to capturing funds, but doing so can provide a number of benefits:

  1. Verifies that the buyer is using a valid card
    By using card authorization, it can be ensured that the purchase was made with a valid card containing sufficient funds available to cover the cost of the purchase.
  1. Reduces cost of chargebacks
    If stolen card details are being used to make a purchase online, a pre-authorization can alert the card owner of fraud before the merchant has shipped the goods. This can save everyone money.

    Without pre-authorization notification, the card would be charged, the thieves would receive the goods, the card owner would need to initiate a chargeback, and the merchant would be out both the cost of the shipped goods and the fees charged by the issuer for the chargeback transaction.

  1. Reduces need to refund cards
    Stock-outs or service cancellations can create a need to process refunds if cards have been charged in advance of providing a product or service. Pre-authorizations will reserve funds without the hassle and, depending on credit card processor, the cost of having to issue refunds if orders are canceled.


How to Void a Credit Card Authorization in NetSuite 2016.2

Previously, authorizations initiated through NetSuite have to be voided externally in the payment gateway account. Depending on the volume of transactions, this is inefficient and time-consuming. If authorizations aren’t voided in a timely manner, customers are unable to utilize the credit on their account, which could create customer service issues.

With the release 2016.2, authorizations can be voided directly on the Sales Order transaction form using the same actions that terminate the order from the NetSuite sales process. If the Sales Order is ‘Pending Approval,’ the authorization can be voided by clicking Cancel Order. However, If the Sales Order has already been approved, the authorization can be voided by clicking Close Order. Users can verify the void status on a Sales Order by navigating to the Billing subtab and viewing the payment events under the Payment subtab.

Please Note: Voiding payment authorizations is available only for CyberSource and Merchant e-Solutions payment processors. Support for additional payment processors may be added in future releases.

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