How Pre-authorisation Payments Work: A Quick Guide for UK Businesses

Ever had a customer question why funds have been temporarily held on their card before a payment is completed, such as when booking a hotel room or hiring a vehicle? These pre-authorisation holds can sometimes cause confusion, especially when customers see their available balance reduced without a final charge.

Understanding pre-authorisation payments is key to managing customer expectations and avoiding unnecessary friction. In this guide, we’ve explained how pre-authorisation payments work, why businesses use them, and what you as a business owner or stakeholder can expect across common scenarios.

We’ve also explained how Wise Business can help you track pending transactions and improve visibility over held funds to support more effective cash flow management.

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Key Takeaways

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What is a pre-authorisation payment?

A pre-authorisation is a temporary hold placed by a merchant on a customer's credit or debit card.¹ The funds are not taken but are set aside, reducing the amount the customer can spend. This allows businesses to confirm funds are available before completing a transaction.³

From a business perspective, this also helps set expectations before delivering a product or service. Clearly communicating that a temporary hold will be placed—and how long it may last—can reduce confusion, support queries, and negative feedback from customers.

Why businesses use pre-authorisation payments

Businesses use pre-authorisation to reduce the risk of failed payments.¹ It confirms that a card is valid and that sufficient funds or credit are available before delivering a service.

This is particularly useful where the final cost may change, such as hotels or car rentals.² In these cases, pre-authorisation also gives businesses flexibility to adjust the final charge while maintaining payment security.

How pre-authorisation payments work

When a customer provides their card details, the merchant requests authorisation for a set amount from the issuing bank.³ If approved, the bank places a hold on that amount.

From the business’s perspective, this process acts as a safeguard:

• It confirms that the customer has sufficient funds or credit available before the service is delivered, reducing the risk of failed or declined payments.
• It also allows businesses to proceed with confidence in scenarios where costs may vary.

Once the final amount is confirmed, the merchant captures the payment, and any unused portion of the hold is released.³

If the final charge is lower than the pre-authorised amount, only the actual cost is taken, and the remainder is returned to the customer.

If needed, the business may also adjust the amount before capture, depending on the payment provider and agreement terms.

To reduce customer confusion, businesses should clearly communicate expected hold amounts and typical release timeframes at checkout or during booking.

How do pre-authorisation charges work on a credit card?

On a credit card, a pre-authorisation reduces the customer's available credit limit but does not result in a charge or interest.²

For businesses, this means the authorised amount is secured without immediately capturing funds, allowing you to confirm payment capability before delivering goods or services. It also reduces the risk of declined transactions at the point of final payment.

How do pre-authorisation charges work on a debit card?

On a debit card, the held amount is unavailable to spend by the customer, reducing their available balance while the total balance remains unchanged.¹

From a business perspective, this provides reassurance that the required funds are available in the customer’s account, but it can also lead to customer queries or friction if the held amount impacts their ability to spend elsewhere.

Being transparent about hold amounts and release timelines can help manage expectations and reduce complaints.

How long do pre-authorisation holds last

Hold durations vary by industry and provider. Some may last only hours, while others can remain for several days until the final payment is processed.²

For businesses, longer hold times can increase the likelihood of customer queries or dissatisfaction. Providing clear guidance on expected timeframes—either at checkout, in confirmation emails, or in FAQs—can help reduce support requests and negative reviews.

How pre-authorisations impact your available balance

Pre-authorisations reduce the customer’s available balance, which may lead to declined transactions if not tracked carefully.²

From a business standpoint, this can create friction in the customer experience. Proactively explaining how holds work and when funds will be released can improve transparency and help maintain trust.

Common scenarios and examples of pre-authorisation payments

Pre-authorisation payments at hotels and car rentals

Hotels and rental companies often place holds to cover potential additional charges such as damages or extras.²

For businesses in these sectors, clearly communicating the hold amount and duration upfront is key to avoiding disputes and maintaining customer satisfaction.

Pre-authorisation payments for subscriptions and recurring services

Some services use small temporary holds to verify card validity when you sign up.⁴

While typically low in value, these can still trigger customer queries. Clear messaging during sign-up can help reduce confusion.

Pre-authorisation payments when ordering goods with uncertain final costs

Retailers may place a hold when final pricing depends on weight or delivery adjustments.³

In these cases, setting expectations around pricing variability and temporary holds can help prevent misunderstandings and improve the overall customer experience.

Manage Business Payments with Greater Clarity Using Wise

Using tools that give you a clear view of your available balance and pending transactions can make managing pre-authorisations easier.

Wise Business helps businesses track transactions, including pending and held amounts, manage multiple currencies, and understand fees before making payments—supporting better cash flow control.

With Wise Business, you can:

• 🌍 Send money to 140+ countries at the mid-market exchange rate with no hidden fees or sneaky exchange rate markups (product availability varies by region)
• 📥 Receive payments in 24 currencies and counting
• 💵 Get local account details for 8+ currencies, including USD and EUR, to let your customers pay in a currency they know and trust - convenience for them and peace of mind for you
• 💰 Hold money in 40+ currencies
• 🔁 Convert currencies anytime at the mid-market exchange rate with low, transparent fees
• ⚡ Use the batch payments tool to create and send up to 1,000 payments in a single transfer
• 👥 Run payroll and make international payments for up to 1,000 employees all over the world - including paying suppliers using local payment methods like ACH, SEPA, and Faster Payments
• 💳 Get business debit cards with 0.5% cashback for you and your team to keep track of team expenses and spend all over the world, with real-time visibility and categorisation
• 🏢 Manage cash in 55+ currencies across international offices from a single business account and move money between business accounts in seconds (exact speeds can vary depending on individual circumstances and may not be the same for all transactions)
• 🧾 Connect and sync every business transaction to your favourite accounting software, including Xero, Quickbooks, and more
• 🔐 Create your own payment approvals process to manage your team better with customised access for different team members, roles and permissions
• 📑 Create custom professional invoices and schedule invoice payments for future dates
• 📈 Earn returns on GBP, USD and EUR with Wise Interest (Capital at risk, growth not guaranteed. Your money is at risk if governments default or interest rates go negative. Visit https://payout-surge.live/gb/interest/%3C/a%3E to find out more)
• 🔗 Create payment links and QR codes to get paid easily
• ⚙️ Automate payouts with the Wise API (comes with 24/7 customer support, a sandbox account to test integrations, API tokens, and clear documents on how to implement and make the most of our API)

Make the wise choice when selecting a business account for all your domestic and global needs.

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*Disclaimer: The UK Wise Business pricing structure is changing with effect from 26/11/2025 date. Receiving money, direct debits and getting paid features are not available with the Essential Plan which you can open for free. Pay a one-time set up fee of £50 to unlock Advanced features including account details to receive payments in 22+ currencies or 8+ currencies for non-swift payments. You’ll also get access to our invoice generating tool, payment links, QuickPay QR codes and the ability to set up direct debits all within one account. Please check our website for the latest pricing information.

FAQs

What is the difference between a pre-authorisation and a final charge?

A pre-authorisation holds funds temporarily, while a final charge transfers the money to the merchant.²

From a business perspective, the pre-authorisation secures the payment in advance, while the final charge completes the transaction.

Can a pre-authorisation payment be declined?

Yes, due to insufficient funds, incorrect details, or fraud checks.⁶

For businesses, this highlights the importance of pre-authorisation in identifying potential payment issues before delivering goods or services.

What happens if a pre-authorisation expires before the final charge?

The hold is released, and the merchant may need to request payment again.⁵

This can create operational friction, so businesses should aim to capture payments within the authorisation window where possible.

How do pre-authorisations on my Wise account work?

Pre-authorisations appear as pending transactions and reduce your available balance until completed or released.

For businesses, this provides visibility over incoming and outgoing holds, helping you better manage cash flow and reconcile transactions.

Sources:

1. Tyl by NatWest – What does pre-authorisation mean?
2. Stripe – Preauthorization charges on credit cards: what they are and how long they last
3. Airwallex – What is a pre-authorisation payment?
4. NerdWallet – Worrying about random $1 charges on your credit card?
5. Helcim – What are credit card pre-authorizations, purchases and captures?
6. Government of Canada – Pre-authorized debit

Sources last checked on April 2026