Incremental authorization

Incremental authorization is a payment operation that raises the amount of an existing card authorization, adding to what was already approved instead of creating a separate authorization. It lets a merchant hold a larger amount on a card as the expected total grows during an open transaction.

The feature is built for situations where the final charge is not known when a card is first presented and can increase over time. Hospitality is the classic case: a hotel authorizes an estimated amount at check-in, then increments it as a guest extends the stay or adds charges, so the single authorization keeps pace with the running total. Card networks define the rules for which merchants and transaction types can use incremental authorization. Recurly does not support incremental authorization.

Why incremental authorization matters for subscription businesses

Incremental authorization keeps the held amount aligned with the growing cost of an open transaction, which protects the merchant from ending up with an authorization smaller than the final charge. Without it, a merchant either has to authorize a large amount up front, which ties up more of the customer's available credit, or risk that the original hold will not cover the final total.

For subscription and recurring-revenue businesses, the relevance depends on the model, but eligibility is set by card network rules based on merchant category, not by billing model alone. A business in an eligible category, such as hospitality or vehicle rental, that also runs open-ended or usage-based charges could use incremental authorization to manage a rising balance on one authorization; a usage-based billing pattern by itself does not qualify a business that falls outside those categories. A straightforward fixed recurring charge usually does not need it, since the amount is known each cycle. Since Recurly doesn't support incremental authorization, a business that needs this pattern would have to manage it directly with its processor, outside Recurly.

How incremental authorization works

Incremental authorization builds on an original authorization rather than replacing it:

1. The merchant obtains an initial authorization for an estimated amount when the card is first presented.

2. As the expected total grows, the merchant sends an incremental authorization request for the additional amount.

3. The issuer approves or declines the increment, and if approved, the total held on the card rises by that amount.

4. Steps two and three can repeat as the balance continues to grow.

5. When the transaction closes, the merchant captures the final total against the accumulated authorization.

Incremental authorization is distinct from a reauthorization, which replaces an expired hold, and from a separate new authorization.

Benefits and examples

Where it applies, incremental authorization has several advantages:

• A held amount that stays aligned with the growing cost of an open transaction.

• Less risk of an authorization shortfall when the final charge exceeds the initial estimate.

• A lighter hold at the start, since the merchant need not authorize a worst-case amount up front.

• One authorization to manage instead of several, which simplifies the final capture.

As an illustration, consider a hypothetical hotel stay. At check-in the merchant authorizes 200 dollars for one night. The guest extends by two nights and uses room service, so the merchant sends incremental authorizations of 200 dollars and then 75 dollars. The total authorized is 200 plus 200 plus 75, or 475 dollars, and the merchant captures 475 dollars at checkout against that single authorization. This is a general industry example; Recurly does not support incremental authorization, so this running-total pattern is not available to Recurly merchants.

Frequently asked questions

What is incremental authorization? It is a payment operation that increases the amount of an existing card authorization by adding to the amount already approved, rather than creating a new authorization. It is used when the final charge can grow while a transaction is open.

How is incremental authorization different from reauthorization? An incremental authorization adds to an existing, still-valid authorization to raise the total held. A reauthorization replaces an authorization that has expired or is about to expire, refreshing the hold rather than increasing it.

What businesses use incremental authorization? It is most common in hospitality and similar settings, such as hotels and vehicle rentals, where the final amount is not known up front and can rise during the stay or rental. Card networks set which categories are eligible.

Does incremental authorization charge the customer more than once? No. It raises the amount held under a single authorization, and the merchant captures one final total when the transaction closes. It is not a series of separate charges.