Description: Electronic authorization is the process by which a transaction is verified before it is completed, ensuring that the payment is legitimate and that the buyer has the necessary funds. This process is fundamental in online payment platforms, as it allows merchants and consumers to conduct transactions securely and efficiently. During authorization, relevant data, such as credit or debit card information, is sent to the corresponding financial institution, which evaluates the validity of the transaction. If everything is correct, authorization is granted, allowing the transaction to proceed. This mechanism protects sellers from fraud and provides consumers with confidence knowing that their data is being verified. Electronic authorization is characterized by its speed, as it typically completes within seconds, and by its ability to integrate with various platforms and payment systems, making it an essential tool in modern e-commerce.
History: Electronic authorization began to develop in the 1970s with the introduction of credit cards and the first payment processing systems. As e-commerce grew in the 1990s, the need for a secure and efficient system to verify transactions became crucial. In 1994, the first online payment system was launched, marking a milestone in the history of electronic authorization. Since then, technology has evolved, incorporating security measures such as two-factor authentication and the use of cryptography to protect user information.
Uses: Electronic authorization is primarily used in e-commerce, allowing consumers to make online purchases securely. It is also applied in point-of-sale transactions, where merchants verify the validity of credit or debit cards before completing the sale. Additionally, it is used in subscription services and recurring payments, ensuring that funds are available before processing each payment.
Examples: An example of electronic authorization is the process that occurs when a customer makes a purchase on a website. When entering their credit card details, the system sends an authorization request to the financial institution, which verifies the information and responds with either approval or denial of the transaction. Another example is the use of point-of-sale terminals in physical stores, where the customer’s card is verified before completing the purchase.
