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Many times on your statement you’ll see the term “authorization fee” or “auth fee.” This is the charge to authorize each individual transaction. After you swipe the card, enter the amount, and hit “enter”on a credit card transaction, there must be authorization before the transaction is complete.
The transaction will travel over the Visa, Mastercard, or Discover network to the issuing bank for the credit card being used. When authorization is given for the transaction, you can find an authorization code on the receipt. If there is any dispute or other issue involving the transaction, the processor will ask for the code number. It is a very important number to have!
On your statement the authorization fee is the cost per transaction to send out the request and return authorization. A good price range for the authorization fee depends on your business type. I’ve seen some as low as 2 or 3 cents and then others up to 10 to 20 cents.
Therefore, this is a very important item to notice on your statement. Especially if yours is a small ticket size business such as pizza shop, quick service restaurant, coffee shop, hot dog stand, etc., every penny counts on every transaction. So pay close attention to the authorization fee.
James Shepherd
