What Is Preauthorization

Preauthorization in the context of the restaurant business refers to the process of reserving a specified amount of funds on a customer's credit or debit card as a guarantee for a future transaction. This is typically done for large or high-value reservations, such as banquets or special events, to ensure that the customer has the financial means to cover the cost of the meal and any associated charges.

The preauthorization process typically involves the restaurant obtaining the customer's card information and obtaining their authorization to charge a specified amount. The funds are then placed on hold and cannot be used for other purchases until the hold is released.

It is important to note that preauthorization is not the same as charging a customer's card. The funds are not actually transferred from the customer's account to the restaurant's account until the transaction is completed. Preauthorization is simply a way for the restaurant to verify that the customer has the necessary funds available.

There are a few key benefits to using preauthorization in the restaurant business:

It is important for restaurants to clearly communicate their preauthorization policies to customers and to obtain their explicit consent before placing a hold on their card. This can help to avoid any confusion or misunderstandings and can help to ensure a positive dining experience for all parties involved.