In order to check if a credit card is valid, stolen or exceeded, it is still a common procedure to authorize a small amount (1 EUR), a so-called ghost authorization, prior to authorizing an actual booking or purchase. This important fraud prevention feature allows verifying the account holder and provides information about the validity of the credit card. The only problem is that the authorization still shows up on the cardholder’s statement. As a result, it might cause confusion and suspicion by the customers.
In order to avoid confusion, payment networks advanced alternative ways to check the validity of credit cards by authorizing a zero-amount instead of an actual value. Main benefit, the authorization does not appear on the customer statement.