Pick a depth. Each prompt opens in your AI pre-loaded with the lesson. Click a row to preview the prompt.
When a customer pays with a card, three distinct events happen: authorization (issuer holds funds), capture (merchant claims them), settlement (money actually moves to merchant's bank). Knowing this trio is the difference between integrating a card processor correctly and accidentally losing money to chargebacks, mismatches, or split captures.
The card payment lifecycle.
1. AUTH (instant; ~200ms)
Cardholder taps/swipes/enters
Merchant → Acquirer → Network (Visa/MC) → Issuer
Issuer checks: balance, fraud rules, velocity limits
Returns: approved + auth_code, OR declined + reason
Effect: cardholder sees "pending" hold; merchant has not yet received money
Hold typically expires in 7 days if not captured
2. CAPTURE (anywhere from instant to days later)
Merchant tells processor "claim the auth_code"
Common patterns:
- Restaurants: auth on order, capture on tip-included total (30 min later)
- Gas pumps: auth $100, capture actual fill ($43.12)
- SaaS: auth + capture in same call (no later capture)
Effect: pending hold converts to settled txn on the issuer's side
Merchant's processor adds it to next batch settlement
3. SETTLEMENT (T+1 to T+5)
Processor's accumulated captures batch into a single net deposit
Funds land in merchant bank account
Processor's fees (interchange + scheme + acquirer markup) already deducted
Effect: cash hits merchant's account, less fees
Typical fees: 2.5-3.5% in the US, 1.5-2.5% in EU, varies by card type
4. REFUND / CHARGEBACK (any time before ~120 days)
Refund: merchant-initiated, processor pulls from merchant's bank
Chargeback: cardholder dispute via issuer; merchant must defend or eat the loss
Failure modes:
Auth approved, capture never sent → hold expires, funds released to cardholder
Capture sent without auth → declined (most processors require auth_id)
Auth amount > captured amount → "uncaptured" hold portion released after grace period