As a merchant, you might think that credit card transactions are as simple as swiping the customer’s card, waiting for the transaction to either be approved or denied and then handing the card back to them. However, there’s far more than just one transaction type. In truth, there are six different types of card transactions — and, as a merchant, it’s in your best interest to know the differences between them all. These differences all depend on what exactly the card is being used for and what exactly is being purchased. Let’s examine all six different credit card transactions and explain what makes each one of them distinct.


The most common and the least complicated transaction type is the purchase — also known as a sale. (When credit cards account for more than 20% of payments, you can know for certain that millions upon millions are making credit card purchases annually.) A purchase or sale is initiated when a merchant receives a payment from a customer. From there, the customer’s credit card information and the total amount from the sale are sent to the credit card processor. The processor then sends the information to the card network and requests approval for the transaction from the customer’s bank for the merchant’s requested amount.

When (or if) the transaction is approved, the processor then delivers a code to the merchant. It’s important to note that this is all happening over a few seconds so that the transaction can be processed and approved (or denied) by the card network promptly.


A pre-auth, also known simply as an authorization, is incredibly similar to the purchase — however, there are a few key differences between the two that are worth outlining. The largest of these is that pre-auths do not actually complete a sale, nor do they immediately extract funds. Like a purchase, the transaction is still processed immediately and an approval code is still sent to the merchant right away. However, the big difference is that the total amount from the sale is not taken from the customer’s account for 7–10 days.

Instead, the funds are set aside and frozen until the merchant submits a capture request. This transaction type is common with hotels, car rentals, and gas stations. This allows the merchant to ensure that the customer has money available on the card without charging them until the service is complete. If there is no capture request submitted after seven days, the customer’s funds are returned and the pre-authorization disappears.


A capture — which is sometimes referred to as a force — comes after a credit card pre-auth. These captures can be authorized up to a full 30 days after the pre-authorization, but the funds from the pre-auth can only be frozen for seven days. During those remaining 23 days, the funds are released and could hypothetically be spent.

What’s unique about captures is that they can only be authorized for the pre-auth amount or less — captures can never exceed that pre-auth price. Typically, captures are for less money than the pre-auth freezes. This is done for security deposit purposes, such as with a hotel or rental car.


A void cancels a transaction that was previously authorized. This can be done to fix instances when a merchant charges the wrong amount to a customer’s credit card, for example. When this happens, a transaction can be voided and then immediately tried again for the right amount.

Like a purchase, voided transactions happen in a matter of seconds. The voided transaction sends to the card network, the customer’s bank is told to cancel the transaction and the approval code, and then the original transaction is done away with. If it’s too late for the transaction to be voided, a simple refund (which will be explained next) can be done instead.


If a void is the opposite of a purchase, then a refund is a reverse purchase. In other words, while voiding simply cancels the transaction before it goes through, a refund returns the money from a purchase after it has been captured or approved. The difference between the two can be seen more clearly on the credit card statement: A voided transaction disappears, while a refunded transaction will show both the purchase (represented by a negative number) and a credit for the same amount as the purchase (represented by a positive number). These refunds happen instantly on the merchant’s end but can take anywhere from 7–10 days to actually appear in the customer’s account.


Going off of the definitions for void and refund, a verification is a transaction for no money. Verifications occur when a merchant wants to check to see that the credit card exists but doesn’t want to make a transaction yet. Transactions make sure the customer’s credit card number is legitimate, that the card isn’t expired, and that the security code is correct. Because no money is involved, verifications do not check the customer’s credit card balance.

The Bottom Line: Defining Transaction Type

Knowing the difference between one transaction type and another is unbelievably important for any merchant out there accepting credit card payments. With more than 191 million Americans owning at least one credit card and the average credit card user owning at least two, these different transaction types are bound to come in handy sooner rather than later. Not to mention, there are over a billion cards currently in use in the United States alone —  if a merchant doesn’t know the difference between these six card transactions, then they’re falling short of being the best merchant they can be for these millions and millions of card users. 

Interested in learning more about accepting credit card payments? Visit NMA’s website to get started.

About NMA 

NMA is a merchant advocacy group dedicated to reducing or eliminating the unnecessary fees associated with accepting credit card payments. Since 2004, NMA’s payment processing solutions have been delivering tailored solutions, best-in-class customer service, and high-quality service offerings for businesses across multiple industries. Whether it’s high-risk or low-risk, brick-and-mortar or e-commerce, NMA will create the best processing experience for your company. For more information, visit us at our website or call us at (866) 509-7199.