Payment Authorization Holds & Failed Transactions

Topic

Authorization Holds

For

Front Office Team

Read Time

~6 minutes

Understanding why patients see pending charges, and how to prevent them.

Overview

Failed payment attempts can create temporary authorization holds on patient bank accounts, even when the transaction ultimately declines. This is a common source of confusion and concern for patients who see multiple “pending” charges that never actually settle.

Real-world scenarios

Scenario 1: Multiple failed attempts. A patient arrives for a checkup and you attempt to process a payment for treatment. The card fails due to an Address Verification Service (AVS) issue. You try a second time with a different card, and it also fails for AVS. The patient’s bank shows both attempts as pending transactions, temporarily reducing their available balance. The patient calls worried they have been charged twice (or more). In reality, both transactions failed and no funds were actually captured.

Scenario 2: Failed attempt, then successful payment. A patient’s payment fails in April due to insufficient funds. The failed transaction appears as a pending hold on their bank account. Two weeks later in May, after confirming funds are available, you successfully process the payment. The patient now sees the April pending hold and the May successful charge, causing confusion about what actually went through.

These scenarios show why clear communication and proper procedures before processing are essential.

Technical background

When a payment is attempted, the processor sends an authorization request to the patient’s issuing bank. The bank reviews the request and decides whether to approve or decline it.

Key point

Even when a transaction is declined, the bank may place a temporary authorization hold on the patient’s account while processing the request.

This hold:

• Temporarily reserves funds in the patient’s account
• Reduces their available balance, though the full balance remains unchanged
• Can last anywhere from a few hours to several business days, depending on the bank
• Eventually drops off automatically when the bank clears the authorization

The patient sees this as a pending transaction in their bank account, even though the payment ultimately failed and was never charged.

Why we cannot prevent authorization holds

Authorization holds are controlled entirely by the patient’s issuing bank, not by the practice, the payment processor, or Smile Advantage.

• The card networks and processor facilitate the authorization request, but the decision to place a hold rests with the bank
• There are no merchant account settings, configurations, or workarounds that can prevent holds from appearing
• This behavior is by design. It is part of how banks manage fraud prevention

What you can control is the number of authorization requests in the first place, which prevents multiple holds from accumulating.

Best practices and SOP

Follow these steps to reduce failed transactions and the authorization holds that come with them.

Before processing any payment

1. Verify billing information. Confirm the patient’s billing address and ZIP code match what is on file with their bank. Check for typos, abbreviations, or outdated information. Ask the patient directly: “Is this address still current with your bank?”
2. Update patient information in your PMS. While verifying the address, update it in your practice management software at the same time. This keeps your records current and prevents future issues.
3. Confirm sufficient funds. For patients paying with debit cards, ask if funds are available. If a patient reports insufficient funds, wait for confirmation before retrying.
4. Document the verification. Make a note in the patient record that the address was verified. This creates a reference point if issues arise later.

If a payment fails

1. Do not retry immediately. Avoid submitting multiple retry attempts in quick succession. Each attempt creates another authorization request and potential hold. Wait at least a few minutes before trying again.
2. Identify the reason for decline. An AVS failure is an address mismatch. For insufficient funds, ask the patient to confirm funds, then retry. For other declines, follow standard troubleshooting.
3. If AVS fails. Ask the patient to verify their billing address with their bank directly if possible, then retry with the address the patient confirms. If the patient is unsure, ask them to contact their bank before you retry.

What to tell patients

When a patient reports seeing multiple pending transactions, use this talking guide:

Sample patient script

“I understand why that is concerning. When a payment does not go through, your bank may temporarily hold the amount while processing the authorization request. Even though the payment failed, it shows as ‘pending’ in your account for a few days. These holds eventually drop off automatically, and you will not actually be charged for those failed attempts. To prevent this in the future, we verify your address before processing payments. If you see a pending charge that concerns you, contact your bank directly. They can tell you when it will be released.”

Key talking points:

• Acknowledge their concern: show empathy and validate their worry
• Explain what happened: it is an authorization hold, not an actual charge
• Reassure them: no funds were actually taken
• Set expectations: the hold will disappear automatically
• Direct appropriately: contact the bank for specifics about timing

FAQ

Why did my patient see multiple pending charges? Each failed payment attempt generates an authorization request sent to the patient’s bank. The bank may place a temporary hold on each request, even if the transaction is ultimately declined. Multiple attempts mean multiple holds.

Can we prevent these holds from appearing? Not directly. Holds are controlled by the patient’s issuing bank. You can reduce the number of holds by verifying information before processing and avoiding multiple quick retries.

How long do authorization holds last? It varies by bank, typically a few hours to several business days. The bank releases them automatically, so you do not need to do anything on your end.

Should we retry a failed payment immediately? No. Wait a few minutes and address the reason for the decline first, for example verifying the address for AVS or confirming funds for insufficient-funds declines. Multiple quick retries create multiple holds.

What is an AVS failure? AVS (Address Verification Service) is a fraud prevention check performed by the patient’s bank. The bank compares the billing address you submit with the address they have on file. If they do not match, even slightly, the transaction declines. It is designed to protect both patients and merchants from fraud.

Can we bypass AVS checks? No. AVS is a security measure controlled by the patient’s bank, and there is no way to override it. The solution is verifying the correct address with the patient before processing.

Who decides how long a hold stays on the account? The patient’s issuing bank controls this entirely, and we cannot influence it.

Troubleshooting

Patient reports a pending charge they are worried about

1. Confirm the status. Check your payment records and confirm whether the charge is showing as successful, failed, or pending on your end.
2. Explain the situation based on what you find. If the payment failed: “Your bank is temporarily holding the amount while processing, but the payment did not go through. The hold will drop off in a few days.” If the payment succeeded: “The pending charge is the actual transaction. Any other pending charges in your account are from previous failed attempts and will drop off.”
3. Direct them appropriately. Only the patient’s bank can release holds or provide specific timing. Encourage them to mention they see multiple pending authorizations from your practice so the bank can clarify which are failed attempts.

Multiple failed attempts in a row

Caution

Stop retrying and diagnose the issue before attempting again. Multiple quick retries create multiple holds.

1. Stop and identify the issue (AVS, insufficient funds, and so on).
2. Correct the underlying problem with the patient’s help.
3. Wait a few minutes before retrying.
4. Document the issue and resolution in the patient record.
5. If it keeps failing, escalate to support rather than continuing to retry.