Transaction lifecycle

Basic flow

Purchase transactions in issuing usually follow these stages:

Authorization -> Reversal / Posted -> Refund

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

• Authorization: Checks whether the transaction can proceed 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

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 transaction
• Whether risk control or network checks pass

Typical authorization-related statuses include:

In this stage:

• AUTHORIZED means the transaction conditions are initially met and the 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 verifies transaction availability and places a hold on the corresponding amount after authorization succeeds.

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

• The transaction is authorized first and later posted based on the actual purchase amount
• The pre-authorization amount differs from the final purchase amount
• The authorization succeeds but is later reversed instead of posted

2. Reversal

A reversal usually occurs after authorization and before posting. It is usually 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 the available balance. The purpose of a reversal is not to create a new purchase, but to cancel the amount that was held and not yet posted.

Reversal-related statuses include:

This status usually means:

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

Common reversal triggers include:

• Active reversal: The merchant or system proactively cancels the original transaction before posting
• Authorization expiry reversal: The system releases the held amount after the authorization expires

3. Posted

Posted is the stage in which the transaction creates the actual accounting result.

Authorization only holds funds first. After the transaction is posted, the purchase becomes final. Posted transactions and authorizations do not always map one-to-one. Many businesses may have split posted records, partial posted records, or final posted amounts that differ from the authorized amount.

Posted-related statuses include:

In this stage:

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

4. Refund

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

Refund-related statuses include:

After a refund succeeds, the funds corresponding to the original purchase return to the card or account side. A refund does not mean the original transaction never happened. It means the original transaction was later partially or fully reversed.