‘Pre (Authorization)’ transaction will be normally only confirm the cardholder’s ability to pay, ensuring that the customer’s credit card account is in good standing with sufficient funds to complete the purchase. The transaction amount will be reserved on the customer’s credit card but will not be charged yet until merchant is doing capture or settlement process. This method is mostly used by merchants who have a delayed in order fulfilment process.
‘Sale’ transaction will combine the (pre) authorization and auto capture (settlement) process, in order to fulfil the order immediately, where issuing bank will straight away charge customer for their order. Credit card associations require merchants to submit a sale transaction request when they fulfil an order immediately.
Capture or settlement transaction will take place after payment (pre) authorization transaction, and it’s used to initiate a funds transfer between the customer’s credit card account and merchant’s account.
Refund transaction is a type of transaction to cancel previous captured or settled transaction, where it will transfer back the fund or money from merchant’s account to the customer’s account.
Void transaction is another transaction type that cancels the original pre (authorization) or sale transaction. But it differs from refund transaction, where those original transactions can only be voided if they have not been captured or settled yet. So under this circumstance, no money or fund is ever actually being transferred from customer’s account to merchant’s account.