The real problem with “AI Smart Coolers” — lingering pre‑authorization holds

Traditional pre-authorization systems were designed to secure funds before a transaction is finalized, but they create challenges in unattended retail environments such as AI Smart Coolers. A pre-authorization places a temporary hold—often higher than the actual purchase amount—to guarantee payment. This can cause friction for consumers who experience unexpected pending charges or delayed refunds if the final amount ends up lower than the hold.  What goes wrong with pre‑authorization on Smart Coolers?  

The Problem with Pre-Authorization

Pre-authorization was originally designed to secure funds before a transaction is completed, ensuring that payment can be processed once the final amount is known. While effective in traditional retail or service environments, it creates significant friction in unattended or automated systems like AI Smart Coolers.

When a pre-authorization is placed, a temporary hold—often higher than the expected purchase amount—is applied to the consumer’s card. This can lead to customer confusion, as they see a larger pending charge than what they actually spend. In cases where the final transaction is lower, the excess authorization remains held until the issuer releases it, which can take several business days.

For high-frequency or low-ticket environments, this process causes additional complications. Customers may face delayed access to their funds, multiple pending charges, or declined transactions if they reach card limits prematurely. From the operator’s perspective, it can lead to unnecessary customer service issues, longer settlement times, and potential revenue loss if authorizations expire before capture.

In modern unattended retail, where convenience and trust are critical, traditional pre-authorization methods are increasingly outdated. They fail to reflect real-time purchasing behavior and often create an unnecessary barrier between the customer and a seamless payment experience.

• A hold sits on the shopper’s card—like a hotel deposit—until the issuer/acquirer releases it.
• Operators, manufacturers, and processors can’t control when those holds drop; each card network/issuer has its own timing.
• Result: frustrated customers, pending charges on statements, and lower repeat visits.

Our Fix: Incremental Pre-Authorization and Instant Settlement

Incremental authorization allows merchants to dynamically increase the initially approved transaction amount when the final purchase exceeds the original pre-authorization. This enables operators to place smaller entry holds—such as $5—while maintaining the flexibility to charge the difference as the transaction amount grows.

By pairing incremental pre-authorization with instant settlement, BevTM ensures that only the actual purchase amount is captured at the end of the transaction. This approach eliminates overcharging, reduces card holds, and improves transparency for consumers. When no purchase occurs, the authorization automatically expires according to the issuer’s policy, creating a smooth and trustworthy payment experience.

Through this model, BevTM—supported by Nayax VPOS Touch and Castles S1U2 technology—provides real-time transaction accuracy, faster settlements, and a frictionless checkout experience across all AI Smart Cooler deployments.

Unique Differentiator — Incremental Authorization

Incremental Pre-Authorization with Minimal Entry:

Minimal entry authorization allows merchants to place a small initial hold on a customer’s card and then increase the authorization amount in real time as purchases occur. This ensures that only actual transactions trigger incremental authorizations, enabling precise and transparent billing while reducing unnecessary card holds. At the end of the transaction, an exact capture of the total purchase amount is processed, and if no purchase is made, the issuer releases the authorization according to its policy.

This process—known as incremental authorization—offers flexibility for merchants and convenience for customers. By starting with a minimal authorization amount (such as $5) and increasing it only when additional purchases are made, merchants can maintain control over funds while providing a smoother, more adaptable payment experience. It minimizes declines caused by underestimated pre-authorizations and ensures the final charge accurately reflects the customer’s spending.

For operators, incremental authorization reduces operational risk and improves approval rates by aligning authorizations with real-time spending behavior. For customers, it prevents large or unnecessary pre-authorization holds from affecting available funds, creating a seamless transaction experience from entry to final capture.

Incremental authorizations are especially valuable in dynamic pricing environments where transaction totals may change after the initial authorization. This applies to industries like hospitality, car rentals, fuel services, vending, and e-commerce—where additional purchases or service extensions are common. By using incremental authorizations, merchants can streamline transaction flows, reduce customer friction, and ensure accurate final settlement.

Ultimately, incremental authorization strengthens trust and efficiency in payments. It helps businesses manage risk, improve authorization success, and enhance overall satisfaction for both merchants and customers.

Results

By implementing incremental pre-authorization and instant settlement, BevTM has resolved one of the most common pain points in unattended retail payments. The solution has led to faster transaction approvals, improved customer satisfaction, and fewer disputes caused by confusing pending charges or delayed refunds.

Operators now experience higher authorization success rates and lower instances of expired or unused holds, resulting in more consistent revenue capture and cleaner reconciliation. For consumers, the process feels seamless—only the exact purchase amount is charged, and funds tied up in unnecessary holds are eliminated.

Together, BevTM’s integration with Nayax VPOS Touch and Castles S1U2 establishes a more transparent, reliable, and scalable payment framework for AI Smart Coolers—setting a new standard for trust and efficiency in autonomous retail.

Incremental Authorization FAQs:

1. What is an incremental authorization?
An incremental authorization allows merchants to increase the initially approved transaction amount when the final purchase total exceeds the original pre-authorization amount. It ensures that the additional funds are properly reserved without needing to start a new transaction.

2. Why do businesses use incremental authorizations?
Businesses use incremental authorizations to handle transactions with variable or unpredictable totals—such as hotel stays, car rentals, vending purchases, or online orders—while maintaining a seamless customer experience and avoiding declines or payment disruptions.

3. Does an incremental authorization replace the original authorization?
No. Incremental authorizations are added to the original authorization rather than replacing it. The total of all linked authorizations represents the full approved transaction amount.

4. Does an incremental authorization extend the validity of the original pre-authorization?
No. The original pre-authorization retains its original validity period. Incremental authorizations only adjust the total approved amount; they do not extend the time window for settlement.

5. Which payment networks support incremental authorizations?
Incremental authorizations are supported by major payment networks, including Visa, Mastercard, American Express, JCB, Diners Club, and UPI.

6. How do incremental authorizations benefit customers?
Customers benefit because merchants can place smaller initial holds on their cards (e.g., $5) and only charge the difference if the final amount is higher, allowing for more flexible and transparent billing.

7. Are incremental authorizations common in vending or unattended payments?
Yes. For vending, parking, and self-service kiosks, incremental authorizations help operators manage variable transaction amounts while minimizing card holds and improving payment approval rates. 

Proof & screenshots

Bottom line

We replace pre‑auth holds with an upfront validity check and instant, one‑shot settlement at exit—delivering a smoother experience for shoppers and stronger retention for operators.