What is the key difference between 'Authorize Only' and 'Authorize and Capture' payment actions?

The key difference between 'Authorize Only' and 'Authorize and Capture' payment actions lies in how the funds are handled during the transaction process.

When a payment action is set to 'Authorize Only', the system requests permission from the customer's bank to hold a specific amount of funds, but does not immediately take the money from their account. This action guarantees that the funds are available for later capture, allowing the merchant to finalize the transaction at a later time. This is particularly useful for merchants who may not want to immediately charge the customer, such as in the case of pre-orders or backorders.

In contrast, 'Authorize and Capture' performs both functions in one step. It not only requests the authorization for the amount but also takes the funds from the customer’s account immediately. This means that the transaction settles at that moment, and the merchant receives the payment right away.

The understanding of these two payment actions is crucial for managing cash flow and customer expectations properly in e-commerce transactions.