Commerce Glossary
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What is a Credit Card Authorization Code?
cred - it card auth - or - i - za - tion code
noun
The credit card authorization code represents the five or six numbers generated by an issuing bank, or the bank of a buyer using a credit card, for the purpose of validating a credit card whenever it is approved in the sale of a good or a service.
How Does a Credit Card Authorization Code Work?
During a sales transaction, an authorization code is sent from an issuing bank with the message to either authorize or decline a sale. The outcome depends on whether the customer has sufficient funds or credit to purchase the product or service in question. If the customer does not have sufficient funds (or the card is stolen or counterfeit), the message signals to decline the transaction.
If the customer does have sufficient funds, the message is to approve the transaction, and the code itself can be used to verify that the transaction was approved.
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