Streamlining payments with Staged Authorisation.
If you’re a private hire or hospitality business, you’ll be all too familiar with the hassle of pre-auths. Your customer approves a payment for a certain amount - great - but when you come to process the payment the final amount ends up being slightly higher…
Resulting in either an awkward request for additional payment or the customer simply not paying the correct amount. A poor customer experience and potentially lost revenue.
So, how do you improve the experience? Keep it simple? And stop clunky payments chipping away at your bottom line?
Welcome to Staged Authorisation.
Staged Authorisation (aka Staged Auth) is a new payment flow, designed to remove friction and hassle for merchants that rely on pre-auth payments - making payments as seamless as possible for merchants and customers alike.
With Staged Auth merchants can authenticate a payment and capture a customer’s card details without ring-fencing (aka holding) funds in a customer’s bank account.
On top of that, the amount the customer authenticates includes what we call a “buffer” (more on this below). This buffer gives merchants the peace of mind that if the final total is slightly higher than estimated, they can still collect the correct amount of funds.
Streamlining your payments with Staged Auth.
Removing friction and protecting your bottom line.
Some merchants rely heavily on estimated payments, think taxi fares, hotel charges, bookings. So, it creates a lot of friction if the final amount the merchant needs to collect when processing the payment is slightly higher. By including our “buffer” in the amount customer’s authenticate, Staged Auth helps to ensure the merchant can collect the correct amount of funds.
Additional payment methods.
This flow is designed to be as seamless as possible for merchants and customers alike. By offering Apple Pay and Google Pay as additional payment methods, it’s even easier for customers to pay as well as helping to improve conversion and drive more revenue for merchants.
No ring-fencing customer funds.
With pre-auths, the money is ring-fenced in a customer’s bank account until or if the transaction is processed. For customers, this isn’t a great experience as the money can sit as pending in their account for up to 30 days. For merchants, this type of flow can be costly (more on that below).
Liability shift with 3D Secure 2.
Our Staged Auth payment flows include a 3D Secure check when the customer authenticates the payment. So, if the payment successfully passes the check there’s a liability shift on the estimated amount from the merchant to the issuer against any fraudulent transactions. Giving the merchant more protection against fraud.
Lower transaction fees.
Compared to typical pre-auths, Staged Auth even helps to lower transaction fees. With pre-auths, 2 calls are typically made to the gateway to process the transaction. One to ring-fence funds in the customer’s bank account and one to process the transaction. Resulting in the merchant paying the gateway fee twice. With Staged Auth we’ve removed the need to ring-fence funds. Which means only 1 call needs to be made to the gateway and only 1 gateway fee needs to be charged.
How Staged Auth works.
In short Staged Auth works in 2 steps:
Step 1: authenticating and recording the transaction.
Step 2: authorising the transaction and moving funds.
A merchant will need to enable Staged Auth for their relevant payment flows (see our Docs for details).
As with a typical pre-auth, when a customer lands on the checkout page they’ll be asked to authenticate a payment.
The amount the customer is asked to authenticate with Staged Auth is based on 2 things:
- The estimated amount (how much the merchant estimates the customer will need to pay)
- The buffer (the blanket % the merchant wants to add on top of the estimated amount for Staged Auth payments)
Cardiff Cars have decided that for all Staged Auth payments they’ll add a 10% buffer. An estimated taxi fare for one customer comes to £50. With Staged Auth the customer will be asked to authenticate a payment for:
£50 (estimated fare) + 10% (% of the estimated fare) = £55
The customer is asked to authenticate a payment for £55.
Staged Auth payment flows work with card payments, Apple Pay and Google Pay - removing as much friction as possible. For customers, the checkout experience looks exactly the same as a standard payment flow. They’ll even be asked to authenticate the payment using 3D Secure to add an extra layer of security.
The customer’s card details are captured and the payment has been authenticated ready for processing. The merchant then has 30 days to collect the funds.
When it’s time to process the transaction the customer’s card details have already been captured and the transaction has been authenticated, so you’re good to go. At this point the merchant will know the final amount they need to charge the customer so they can go ahead and collect the correct amount of funds.
Cardiff Car’s customer authenticated a payment for £55 (based on the estimated fare of £50 + a 10% buffer of £5) using Staged Auth.
The final amount came to £52.50 - higher than originally estimated.
Thanks to Staged Auth's “buffer” the merchant can easily collect the correct amount of funds in a single transaction.
Learn more about Staged Authorisation.
Staged Authorisation is our latest feature, designed to help remove friction at the checkout, improve customer experience and minimise costs. To learn more about how Judopay can power your business’ growth, get in touch. Or if you want to learn more about Staged Auth, check out our docs.