In 2023, around 35 million credit cards were in circulation in Germany. Card-based revenue in the country has been steadily rising since 2007, reaching a new high in 2024, when it surpassed €147.6 billion. With that in mind, businesses must ensure reliable payment protection while maintaining flexibility. One efficient tool that can help with this is preauthorization.

This article explains what preauthorization is, which cards and other payment methods support it, and when it makes sense to create a hold on a credit card. We’ll also tell you which industries in the German market use it most, and how you can roll out preauthorization in your business.

What’s in this article?

• What is preauthorization?
  
• Which payment cards have preauthorization capabilities?
  
• What other payment methods can be preauthorized?
  
• When does it make sense to create a hold on a credit card?
  
• Which industries in Germany use preauthorization the most?
  
• How can businesses in Germany implement preauthorization?
  
• How Stripe Payments can help
  

What is preauthorization?

A temporary hold—also called preauthorization—is a core processing practice that protects both brick-and-mortar retail transactions and electronic payments. Also known as preauth, card authorization, or an authorization hold, this process temporarily reserves a balance on a credit card or other checkout option for a set amount before completing the charge, without immediately debiting the account. The block ensures that there are sufficient funds to complete the sale at a later time.

Preauthorization grants the payment service provider (PSP) temporary consent to charge a specific amount. It reassures sellers that customers have enough funds and protects buyers from improper or premature billing. It is beneficial for use cases when the final invoice total remains unknown at the time of booking. A common example is a hotel stay, which might be subject to additional costs beyond the room price, such as minibar charges, breakfast, or late checkout fees.

How does preauthorization work?

When a payment starts, the seller sends a request directly to the relevant PSP. This provider verifies whether the customer’s payment method has enough balance and, if it does, grants temporary approval for the requested sum. The amount is not charged until later, following completion.

If the PSP rejects the preauthorization, it prevents a hold from forming, and the transaction fails. If, however, the provider approves the hold, they block the requested sum for a specific period of time. The system usually keeps it reserved for five to seven days until the seller completes the payment or the hold expires automatically. The length can vary depending on the PSP and type of transaction; but, it can last up to 30 days in some cases.

What types of preauthorization are there?

There are basically two different kinds of preauthorization:

• Full authorization: The seller reserves the entire transaction amount before collection. This standard flow applies when the sum is final, as is typically the case with most online purchases.
  
• Partial authorization: Partial authorization applies when the final amount is not yet determined. When this is the case, a partial sum is first preauthorized, and then amended later if necessary.
  

Which payment cards have preauthorization capabilities?

Many different cards have preauthorization capabilities—in particular, the most common credit, debit, and prepaid cards.

Credit card

Credit cards, such as Visa, Mastercard, or American Express, allow for preauthorizations. Their credit line permits a hold without charging the sum immediately. To run a preauthorization, the seller sends a request to the issuer, who then places a temporary freeze on the account for the requested amount. When the transaction goes through, the issuer releases the reserved balance.

Debit card

Debit cards can also be preauthorized. Unlike credit cards, these draw directly from a current account, The hold locks money there, and the bank deducts the amount later. If an account has an overdraft facility, a preauthorization might push it into overdraft if there are insufficient funds available.

The German girocard does not currently support holds. Nevertheless, some banks offer co-badged debit cards that do allow preauthorizations in certain instances.

Prepaid card

Many issuers also permit preauthorizations on prepaid cards, provided the stored value is adequate. In principle, prepaid cardholders can only use the balance they have loaded. This applies to both transactions and preauthorizations.

What other payment methods can be preauthorized?

There are a few other methods, aside from credit, bank-linked, and prepaid cards, which also support preauthorization. These include digital wallets, mobile payment services, and online pay options.

Digital wallets such as Apple Pay, Google Pay, or Samsung Pay allow preauthorizations because they work with a credit or debit card under the hood. Here, the hold locks the linked payment method, and the bank charges the amount later. Preauthorizations work for online PSPs, such as Affirm, Afterpay, Cash App Pay, Klarna, and PayPal, following the same principle.

When does it make sense to create a hold on a credit card?

A temporary hold makes sense when the final invoice total is still uncertain, but the business needs to confirm the customer’s ability to pay in advance. Such freezes are especially useful for services that involve variable or extra costs. Typical cases include travel, hotel, or rental car bookings. By placing a freeze on a credit card, sellers can accommodate any extras or changes to the invoice. If the final figure is lower than initially assumed, the seller can adjust the hold or remove it altogether.

Which industries in Germany use preauthorization the most?

Below, you’ll find a few examples of industries in Germany where preauthorization is particularly prevalent:

Hotels

Hotels and accommodation operators frequently place holds on guests’ cards as a form of security deposit to cover any added costs or damages caused during a stay. The hotel generally releases it upon checkout and charges the actual bill due to the card.

Travel

Travel agencies and airlines use preauthorization for vacation and flight bookings. This approach works well for reservations with variable prices or options for changes and cancellations.

Car rental

Car rental companies reserve money on a card to cover the rental fee, insurance, and a security deposit for any damages. They adjust or release this hold once the customer brings back the vehicle. The amount depends on the rental duration and the type of vehicle. After inspecting the car, the company either lifts the hold or updates it as needed.

Gas stations

Gas stations run preauthorizations when customers pay at the pump with a card. Initially, a hold is placed for a flat fee to ensure that the customer has sufficient funds to cover their fuel purchase. Once the fill-up ends, the system only charges them for the cost of the fuel they actually used and returns any excess from the hold.

Gastronomy

At high-end restaurants or for large groups, some operators set a pending charge on a diner’s credit card before taking their order. Once the restaurant closes the bill, it either updates the hold to reflect the actual costs or voids it entirely.

Rental services

Preauthorizations are also customary in rental services, such as equipment or furniture. Here, the hold acts as a form of security deposit, covering any potential loss or damage to the item.

How can businesses in Germany implement preauthorization?

In Germany, businesses can use Stripe to place holds on credit cards by separating payment authorization from capture. First, the issuer approves the charge, reserving the corresponding amount without collecting it immediately. When the business closes the invoice total—or if the figure changes—it adjusts or lifts the hold as applicable.

Stripe facilitates manual payment capture, allowing hotels to reserve a balance on a card before their guests arrive, and only charging the final amount upon checkout. Most issuers and providers keep holds in place for between five and seven days. Longer freezes are also possible in some instances, such as on Japanese accounts, which allow up to 30 days. Stripe supports preauthorization for all kinds of payment methods, including credit cards, as well as mobile and online payment services.

After a checkout option is successfully preauthorized, its status changes to “ready for capture.” The business can collect the reserved sum until the authorization expires. If no one captures the charge within that window, the hold will cancel by default.

Businesses can also manually remove authorizations or receive full or partial amounts via the Stripe Dashboard or an API (application programming interface). Stripe also offers the option of automatically collecting payment shortly before expiry—meaning there is no need to charge manually.

How Stripe Payments can help

Stripe Payments provides a unified, global payments solution that helps any business—from scaling startups to global enterprises—accept payments online, in person, and around the world.

Stripe Payments can help you:

• Optimize your checkout experience: Create a frictionless customer experience and save thousands of engineering hours with prebuilt payment UIs, access to 125+ payment methods, and Link, a wallet built by Stripe.
  
• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency management with cross-border payment options, available in 195 countries across 135+ currencies.
  
• Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalize interactions, reward loyalty, and grow revenue.
  
• Improve payments performance: Increase revenue with a range of customizable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorization rates.
  
• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% uptime and industry-leading reliability.
  

Learn more about how Stripe Payments can power your online and in-person payments, or get started today.