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What is a credit card authorization code?

cred - it card auth - or - i - za - tion code
noun

The credit card authorization code consists of five or six digits generated by either the card-issuing bank or the buyer's bank when using a credit card. Its primary function is to validate credit card transactions when approving the purchase of goods or services.

How does a credit card authorization code operate?

During a sales transaction, the issuing bank sends an authorization code with instructions to either approve or decline the sale. The outcome hinges on whether the customer possesses enough funds or available credit to complete the intended purchase. If the customer lacks sufficient funds or if the card is reported as stolen or counterfeit, the message instructs the decline of the transaction.

However, if the customer indeed has the necessary funds or credit, the message signals approval for the transaction and the code itself serves as verification of the authorized status of the transaction.