Learn about the payment lifecycle in digital commerce and how Checkout handles it.
Checkout manages the following stages of a payment lifecycle:
- Authorization
- Payment capture
- Authorization cancellation
- Refund
Authorization
It is the first stage in a payment process, during which a customer is verified for sufficient funds or credit to complete the payment transaction.
If an authorization is successful, the given amount is reserved and not deducted from the customer's account. The payment is put on hold for a specific period of time (typically between a few days to a week) and the funds will not be available for other transactions during this time.
If the designated timeframe elapses and the funds are not captured meanwhile, the authorization expires and the reserved funds are released. As a result, the customer regains access to these funds, making them available for other transactions.
How Checkout manages authorizations
When a customer clicks the final button in a checkout process or when you trigger a payment with the
Checkout Transactions API, the following takes place:
- Checkout creates a Payment containing the selected payment method and a Transaction with
state=Initial.
- Checkout sends a payment request to the payment service provider (PSP) or to the gift card management system to authorize the Payment.
- Since the authorization request is asynchronous—while the PSP or the gift card management system processes the Payment—Checkout sets the
state of the Transaction to Pending and creates an Order.
- The PSP or the gift card management system notifies Checkout about the authorization outcome and, depending on the outcome, the
state of the Transaction is set to Success or Failure.
Payment capture
During this stage, an authorized Payment amount is captured—meaning the funds are deducted from a customer's account and transferred to the merchant’s account.
The PSP or the gift card management system executes payment capture automatically, if an auto capture process is configured; or any merchant process can manually trigger the process during the processing of an Order.
It might happen after the
Order is created—when the goods are ready to be delivered, or in any other business scenario.
How Checkout manages payment captures
The process to capture funds after an Order is created is a business decision and your responsibility, as a merchant.
If you trigger payment capture manually through a process, you can
request payment capture to the PSP or to the gift card management system using the Checkout Payment Intents API. After sending the request, Checkout adds a
Transaction of
type=Charge to the existing
Payment inside the
Order.
If the PSP or the gift card management system triggers the capture through an auto capture process, Checkout adds a
Transaction of
type=Charge after it's notified by the PSP or the gift card management system.
Authorization cancellation
In this stage, an
authorization is voided before a payment is captured, allowing the customer to access the reserved funds again. This is typically done when an order must be cancelled, for example, when a customer requests to cancel the order or when the order cannot be fulfilled.
How Checkout manages authorization cancellations
Cancelling an authorization is outside the scope of Checkout—similar to
payment capture—as it occurs after an Order is created. However, using the Checkout Payment Intents API, you can
request the Payment cancellation to the PSP or gift card management system. After sending the request, Checkout adds a
Transaction of
type=CancelAuthorization to the existing
Payment inside the
Order.
Refund
In this stage, a captured payment is returned to the customer for a given order. It occurs when the customer requests a refund, goods are returned, or you need to reimburse the customer for any reason. Depending on the scenario, a refund can be partial or full and cannot exceed the captured amount.
How Checkout manages refunds
You can
request a refund to the PSP or gift card management system using the Checkout Payment Intents API. After sending the request, Checkout adds a
Transaction of
type=Refund to the existing
Payment inside the
Order, along with the amount to be refunded.
As several partial refunds can happen during the payment lifecycle, you can
refund Payment multiple times, as long as the amount to refund does not exceed the total amount of the original Payment.
Payments in the Merchant Center
Payments created by Checkout can be viewed in the Merchant Center from an Order's detail page. To access the Payments related to an Order, go to Orders > Order list, select the Order, and then click the Payments tab.
The following Payment information is available:
- Payment method: the payment method used by the customer for the Order
- Payment service provider (PSP): the PSP or gift card management system associated with the payment method
- Payment provider ID: the identifier assigned by the PSP or gift card management system on its system for the payment
- Amount planned: the total amount of the Payment
- Payment transactions: the Transactions added to the Payment during its lifecycle and the related information
When should I start fulfilling an Order?
As PSPs and gift card management systems work asynchronously, regardless of the first response to an
authorization request that they return, you must wait for a notification that confirms the authorization of the Payment. To receive notifications about Payment updates, you can use
Subscriptions.
You should start fulfilling an Order only if the Payment contains a
Transaction whose
type=Authorization and
state=Success.
What happens if an Order was created but the Payment is not authorized?
If the PSP or the gift card management system does not
authorize the Payment, Checkout updates the Payment by setting the
state of the
Transaction of
type=Authorization to
Failure. However, it's your responsibility to decide how to proceed with the created Order.
What happens if an Order was not created but the Payment is authorized?
After a Payment is authorized or captured, Checkout updates it accordingly. However, due to unpredictable errors, it can happen that a
Cart might not be converted into an
Order. In such a case, for example, you can
cancel the Payment or
create the Order again.
To receive notifications and react to similar scenarios, it's your responsibility to use
Subscriptions.
