What is a credit card prepayment?

What does credit card prepayment mean? Credit card pre-authorization refers to a transaction in which the card issuer or its agency confirms the permission to freeze the amount before the special merchant debits the money. Generally speaking, pre-authorization can also be regarded as an advance payment method close to a "deposit". So we can understand credit card prepayment as pre-authorization.

Generally, credit card pre-authorization problems mostly occur when a credit card is used to book hotels, air tickets or car rentals. The bank will first freeze part of the funds in the credit card at the merchant's request as a "guarantee" for the consumer's consumption at the merchant. ". Credit card pre-authorization is equivalent to paying a deposit for consumption, but it is more convenient than paying a deposit because the cardholder does not have to actually come up with money. Compared with cash and debit cards, the advantages are very obvious.

Take a hotel as an example. The cardholder swipes the card at the hotel front desk for pre-authorization when checking in, and only freezes a certain overdraft limit on the cardholder's card. The actual consumption deduction and settlement will be made when the cardholder leaves the hotel. Not all POS can do credit card pre-authorization transactions. UnionPay only allows a few industries such as hotels and car rentals to activate this function.

Using credit card pre-authorization can not only meet urgent needs when consumers are short of cash on hand, but also reduce cash transactions. However, when applying for pre-authorization, you must carefully check the signature issued by the POS machine. If it is pre-authorized, it will be clearly marked in the transaction type column, and you must confirm before signing.

What does credit card reservation consumption mean?

Credit card reservation consumption means that customers can log in to online banking (registration version 6.7.0) and specify a single transfer operation on a certain day in the future, or Agree on a certain time period in the future to carry out transfer processing on a daily, weekly or monthly basis. The system will transfer the amount to the designated account on the date agreed by the customer and send a free SMS reminder of the transfer result.

1. Bank credit cards can handle pre-authorization business:

Special merchants obtain the cardholder’s 30-day payment commitment within a certain proportion of the pre-authorized amount from the card issuer, and then The cardholder performs the acceptance business with the card issuer after obtaining goods or receiving services. Generally speaking, it is a business that first freezes part of the bank card funds as a deposit, and then settles according to the actual consumption amount;

2. Bank credit card cash advance methods:

(1) ATM cash withdrawal (With card): Customers can withdraw local currency with the transaction password at an ATM machine with the UnionPay logo or the VISA/Plus or MasterCard/Cirrus logo displayed on your credit card at home or abroad.

(2) ATM cash withdrawal reservation: Customers can log in to the registered version of mobile banking, select the ATM cash withdrawal reservation function, enter the reservation cash withdrawal information to obtain the reservation number, and then select the mobile banking reservation cash withdrawal option on the China Construction Bank ATM machine. , by entering your mobile phone number, transaction password and reservation number, you can realize the cardless cash withdrawal function.

(3) Cash withdrawal at bank counters: In China, customers can withdraw RMB cash at the counters of various Bank of Communications outlets with their credit cards and transaction passwords. Overseas, customers can withdraw local currency or equivalent value at a bank counter with a VISA or MasterCard logo with a valid ID and credit card.

(4) Bank counter transfer: Customers can transfer the RMB funds in your credit card to other bank card accounts at the counter of any Bank of Communications outlet with the credit card and transaction password.

Bank credit card cash advance limit:

(1) When customers use credit card overdrafts to withdraw cash overseas, each card shall not exceed RMB 10,000 or its equivalent per day.

(2) When the customer has sufficient surplus deposits and uses a credit card to withdraw cash overseas:

(3) When the customer withdraws cash from an overseas automatic teller machine (ATM) in his RMB account, each card shall be The daily accumulated amount shall not exceed RMB 20,000;

(4) When withdrawing cash from overseas China UnionPay networked automated teller machines (ATMs), the daily accumulated amount per card shall not exceed RMB 10,000 or its equivalent;

(5) At the same time, when withdrawing cash from overseas China UnionPay network automatic teller machines (ATMs), the daily total cumulative amount of each card shall not exceed 20,000 yuan or its equivalent;

(6) Customer’s When withdrawing local currency cash from an account overseas, the daily accumulated cash withdrawal amount shall not exceed the equivalent of US$1,000, the monthly accumulated cash withdrawal shall not exceed the equivalent of US$5,000, and the accumulated cash withdrawal amount every six months shall not exceed the equivalent of US$10,000.

Consumption risks of credit card pre-authorization consumption

What is credit card pre-authorization consumption? What’s the difference from paying directly with a credit card? Will it have any impact on the cardholder's credit? What do you think about the risk level of pre-authorized transactions versus ordinary card purchases? Does debit card also have pre-authorization service?

Credit card pre-authorization consumption method

When a cardholder makes a purchase at a merchant, the merchant's cashier applies to the card issuer for authorization based on the cardholder's needs and the pre-estimated consumption amount, and the card is issued. The institution will respond based on the customer's account situation. For approved applications, the credit limit or deposit amount (debit card) in the cardholder's bank card will be temporarily frozen as a deposit. After the cardholder's consumption is officially completed, the merchant will calculate the actual consumption amount. , requesting a formal liquidation from the card issuer. Generally speaking, the frozen amount cannot exceed 115% of the pre-authorized transaction amount.

In layman terms, it means that when you make a reservation at a hotel, the hotel will freeze the amount that should be consumed on your credit card in advance. When you finish the meal, after your signature is confirmed, the money will be transferred from your credit card. The bank account transfer is generally equivalent to the deposit deducted by the merchant in advance to ensure that the consumer has enough money to pay.

Debit card and credit card pre-authorization consumption

Pre-authorization business is commonly used in hotel reservations and car rentals. Whether it is a credit card or a debit card, pre-authorization can be performed. However, a credit card needs to have a sufficient overdraft amount, and a debit card needs to have a sufficient account balance.

Risk of debit card and credit card pre-authorization consumption

UnionPay reminds that the risk level of "pre-authorization" transactions is the same as that of ordinary card consumption. In order to avoid losses, if customers want to cancel their reservation, they must go through the cancellation procedures with the hotel or agency before the specified time and ask for the cancellation number as a cancellation voucher. Otherwise, the merchant will deduct the corresponding room fee as agreed, and payment cannot be refused in this case.

That’s it for the introduction to credit card pre-spending.