Transaction lifecycle

Basic flow

Purchase transactions in issuing usually follow these stages:

The transaction lifecycle describes how a purchase transaction moves from authorization checks and fund holds to accounting confirmation and later adjustments. Different stages correspond to different transaction statuses and fund processing results.

• Authorization: Checks transaction availability and places a hold on the corresponding amount after authorization succeeds
• Reversal: Cancels the original authorization before posting and releases the held amount
• Posted: Confirms the accounting result for a completed purchase and creates the final debit result
• Refund: Initiates a reverse fund adjustment based on the original transaction and returns part or all of the amount
• Dispute: A cardholder challenges a posted transaction, with the dispute outcome determining fund responsibility

1. Authorization

After the cardholder initiates a payment, the transaction usually enters the authorization stage first. This stage determines whether the transaction meets the basic conditions for continued processing.

During authorization, the system usually checks:

• Whether the card is available
• Whether the balance or limit is sufficient
• Whether transaction rules allow the payment
• Whether risk control or network checks pass

Typical statuses related to authorization include:

In this stage:

• AUTHORIZED means the transaction initially meets the required conditions, and funds are usually held first
• AUTH_FAILED means authorization did not pass, and the transaction does not continue

Card verification is a special type of authorization check. It is usually used to confirm whether a card is available, but it does not mean an actual purchase has occurred.

The authorization stage usually does not represent the final debit. It checks transaction availability and places a hold on the corresponding amount after authorization succeeds.

In some scenarios, the authorized amount and final posted amount may differ. For example:

• Authorization occurs first, and posting later uses the actual spending amount
• The pre-authorized amount differs from the final purchase amount
• Authorization succeeds, but the transaction is later reversed and does not proceed to posting

2. Reversal

Reversal usually occurs after authorization and before posting. It is generally an alternative outcome to posting.

If a transaction does not continue after authorization, the issuing system or merchant side can initiate a reversal to release the previously held amount back to available balance. The purpose of reversal is not to create a new purchase, but to cancel the amount that was held and has not been posted.

Statuses related to reversal include:

This status usually means:

• The original authorization existed, but did not proceed to posting
• The held amount has been released
• The transaction will not continue to completion under the original authorization

Common reversal scenarios in the industry include:

• Active reversal: The merchant or system actively cancels the original transaction before posting
• Authorization expiry reversal: After authorization expires, the system releases the corresponding held amount

3. Posted

Posting is the stage where a transaction creates an actual accounting result.

Authorization only holds funds first. After posting succeeds, the purchase becomes final. Posting and authorization do not always correspond one-to-one. Many businesses may involve split posting, partial posting, or a final posted amount that differs from the authorized amount.

Statuses related to posting include:

In this stage:

• POSTED means the transaction has been posted
• POSTED_FAILED means posting did not succeed, and the previously held amount is usually released according to rules

4. Refund

A refund is a reverse adjustment to the original transaction, returning the original purchase amount through the corresponding accounting path.

Statuses related to refunds include:

After a refund succeeds, the funds corresponding to the original purchase return to the card or account side. A refund is a reverse fund adjustment based on a transaction that has already been posted. It returns part or all of the posted amount according to the processing result, but it does not change the fact that the original transaction occurred.

5. Dispute

A dispute is a subsequent processing type initiated when a cardholder challenges a posted purchase. Unlike a refund initiated by the transaction merchant, a dispute is processed according to transaction facts, supporting evidence, and applicable rules. It is managed as a new record linked to the original posted purchase.

The primary dispute transaction types are:

Disputes apply only to transactions that have posted and resulted in an actual debit. For dispute reasons, case processing, and the full status model, see Transaction disputes.