Pre-authorized payments allow distributors to require customers to authorize a card payment before an order is placed. When a customer submits an order, a temporary hold is placed on their card for the order amount. Once the final invoice is confirmed, the hold is updated to the invoiced amount and the payment is captured.

This feature is available to any distributor with Payments enabled and can be turned on or off per customer directly in PMC.

How Pre-Authorization Works

When pre-authorization is enabled for a customer, the following process occurs each time they place an order:

At checkout: When the customer submits their order, Pepper places a hold on their credit or debit card for the order total. This appears as a "Pending" charge on their card statement. The hold is only placed at the moment the order is submitted.
After the order is invoiced: When the invoice is confirmed, the hold is adjusted to the final invoiced amount and the payment is captured. If the final amount is lower than the hold, the customer is charged the lower amount. If the final amount is higher, the updated charge is attempted.
In PMC: Pre-authorized payments appear in transaction history with the status "Hold on card" until the payment is captured.

Note: Pre-authorization works with credit and debit cards only. It is not available for ACH payments. If a customer has only an ACH account linked and no card on file, they will be blocked from placing an order until a card is added.

Enabling Pre-Authorization in PMC

Pre-authorization is configured per customer and can be enabled directly in PMC by any admin with access to customer settings.

In PMC, navigate to the Customers tab.
Select the customer you want to configure.
Locate the Pre-authorize payment for order total on order placement toggle and enable it.
Save the changes.

Note: Once enabled, anyone placing an order for that customer must have a card on file to complete checkout.

Setting an Additional Authorization Percentage

For customers whose final invoiced amounts may exceed the original order total (for example, due to catchweight items or variable delivery fees), distributors can request that an additional buffer percentage be added to the pre-authorization amount.

For example, if a customer's orders frequently come in higher than originally quoted, a 20% buffer can be applied so that the hold placed at checkout is 120% of the order total. This reduces the chance of a payment failing when the invoice is confirmed at the higher amount.

Note: The additional authorization percentage is not currently configurable in PMC. Contact your Pepper representative to have this set up for a specific customer.

Cancelling a Pre-Authorized Hold

If an order is cancelled or a hold needs to be released before payment is captured, distributors can cancel the pre-authorization directly in PMC without needing to contact their payment processor.

In PMC, go to Transaction History.
Locate the payment with the status "Hold on card". Use the payment status filter to find all pending holds quickly.
Select the payment and click Cancel to void the hold.

When a hold is cancelled, the customer receives an email notification confirming the release.

Note: A hold can only be cancelled before it has been captured. Once payment has been captured, standard refund options apply.

Pre-Authorization and Subscriptions

Pre-authorization is compatible with Pepper's subscriptions feature. When pre-authorization is enabled for a customer, they must have a card on file before creating a subscription. When a subscription order is placed, the pre-authorization process applies in the same way as a regular order.

If a subscription order fails pre-authorization, for example because the card on file is declined, the customer will receive an alert in the app explaining why the order could not be placed and prompting them to update their payment method.

Things to Know

Authorization hold expiry

Pre-authorization holds are not guaranteed indefinitely. Pepper attempts to extend the hold after 7 days to reach a maximum of 14 days. If the hold cannot be extended, or if an invoice has not been confirmed within 14 days, the hold will be released automatically. The invoice will remain open and payable through the app or PMC.

Note: The exact expiry timeline can vary depending on the customer's card issuer. In most cases, the hold will remain active for up to 14 days.

What happens if pre-authorization fails at checkout?

If a customer's card is declined at checkout, the order will not be placed. The customer will see an error message indicating the reason for the decline. The distributor is not separately notified when a pre-authorization fails at checkout.

What happens if the final amount is higher than the hold?

If the final invoiced amount is higher than the pre-authorized amount, Pepper will attempt to capture the updated amount. If the card has sufficient funds, the payment will process at the invoiced amount. If it does not, the invoice will remain open.