Every business enjoys getting paid, and payment methods like debit and credit cards make the process quicker. While instant payments may be ideal for most companies, some require special payment arrangements and a flexible system that enables them to collect funds in a way that makes sense for their particular business model.
For some business types, instant payments don’t fit the type of transaction taking place – either for the business or the customer. Fortunately, with Chargent, these businesses can authorize payment, then collect their customer’s funds using a delayed capture.
While it sounds like a fancy term, it’s really quite simple to understand – and in this post, we’ll explain what delayed capture is, describe the impact it can have on your business, and show you how easy it is to set up with Chargent.
What is Delayed Capture?
In short, “delayed capture” is a form of card authorization delay. It enables vendors to make sure customers have enough money or credit available to cover a transaction – so the vendor can receive full payment in the near future.
In payments, the term capture is similar to the transfer of money. For delayed capture, the merchant authorizes the payment, then returns later to complete the transaction and transfer the funds. Essentially, during this process, a vendor tells the card company – electronically – that they and their customer have agreed on doing business for a certain amount of money. Then, that value is reserved on the customer’s card for the merchant to collect or capture later.
Issuing an immediate capture will allow you to access the funds quickly. Maybe this seems like an ideal scenario, but it can backfire. Things like fraud and chargebacks can be challenging to deal with and can ultimately affect your cashflow. Plus for many industries, the card networks like Visa, Mastercard, and American Express expect you to capture funds only at the conclusion of a transaction. Authorizing first tells you that you will get paid, at the conclusion – whether that is a few minutes or a week later.
Why Delay Capture?
There are several benefits to delaying the capture of a customer’s payment, depending on how your business operates. Some of these benefits include:
- Fraud Prevention: If a vendor believes that a transaction is suspicious, delayed capture provides enough time to verify a customer’s credentials before delivering a product or service.
- Inventory Supply: If products are not available immediately, delayed capture can give you time to restock ordered items before fully processing the customer’s payment.
- Flexibility: If you end up needing to void a transaction, you can do so before processing the payment – allowing you to avoid additional transaction fees assumed when processing a refund.
CHECKLIST: How to Save on Payments, Improve PCI Compliance
10 crucial steps to make your Salesforce payment process secure, easy and profitable
As a customer, there are many times that you have likely encountered delayed capture in your day-to-day life. Here are a few examples:
- Hotel Stay: When checking in at a hotel, you will typically swipe or tap your card. When you do this, you are permitting authorization for an agreed-upon amount. Assume the room costs $100. During your stay, you order a coffee delivered from room service and grab a minibar snack – both charged to your room. Upon checkout, the hotel will collect the total amount owed – let’s say $110 for this example. Hotels accomplish this delay by sending a capture command to the payment network, referencing the authorization from the beginning of your stay.
- Gas Stations: Have you ever noticed a $50 pending transaction on your card after pumping fuel at the gas station? This is an authorization. In this case, they are using this delay to ensure that the card is valid and has at least $50 worth of value available. When you hang up the fueling nozzle, the system captures the actual amount of the fuel that you have expensed – using a capture command sent digitally to the card company.
- Collecting Upon Fulfillment: In retail and manufacturing, some customers (primarily B2B) pay after receiving their items. In other words, the merchant fully processes the transaction after fulfilling the order. Chargent supports many companies in these two industries – enabling them to collect payments in the way that best fits their business model.
Delayed Capture Authorization With Chargent Anywhere
Are you ready to set up delayed capture authorizations for your transactions? The Chargent Anywhere payments application for Salesforce makes the process as straightforward as possible.
First, let’s assume that you are a salesperson at a merchant company, taking a call from “Natasha” at the customer’s office. The Avengers (we’re Marvel lovers at Chargent) are ordering a dozen T-shirts to give away at a homecoming rally (and by the way – Hulk needs a size 42x). For the sake of simplicity, we’ll price the entire order at $100.
To set up our delayed capture, we’d simply follow these four steps:
- Click the Payment Console button to verify the card number. In this instance, Chargent already has a payment source on record. The record shows a Visa card ending in 1111 with an expiry of 12/21. For this payment method, the card security code (CSC) is grayed out – it is only required the first time someone enters their card details into your Chargent-powered payment system.
- As the merchant working in Chargent Anywhere, you can take a pre-authorization by clicking Authorize. Here, we see that the authorization was successful!
- It is a best practice to actively review your transactions until you get a good feel for working in Chargent and learn all the behaviors you should expect. As you evaluate, you notice the transaction type is Authorization and can see that it was approved.
A few days have passed – the T-shirts are printed and have made their way into the fulfillment department. The process now transfers from you, the salesperson to the fulfillment manager, so they can complete the final step.
In the last step, the fulfillment manager will click the Payment Console button. Here, they can clearly see that there is an authorization ready to be either voided or captured. In this case, capture is the right choice since the company has already printed the shirts and prepared the packaging slip.
The items are ready to ship, the customer is happy, and once approved, the money shows up in the company’s bank account!
Better Payments for Every Business
Chargent isn’t just your average payment solution – it’s a dynamic and flexible system that can serve your business’s individual needs as you scale and grow. Whether your business requires delayed capture or recurring billing options, Chargent has the features to bring your payment collections to a new level. If you’re unsure whether your business should be using delayed capture, feel free to contact us – we’re here to help you with all of your Salesforce payment questions.
Is your organization currently using delayed capture for a business model that we didn’t mention? Tell us about it in the comments section!