Authorization Fee is a cost associated with payment processing that can be shifted from the store owner to the purchasing customer. It’s an option that allows for the distribution of transaction costs between the merchant and the customer. Here are the key points about Authorization Fee (AF):
- Cost Distribution: Authorization Fee allows for the transfer of part or all of the payment processing costs from the company or merchant to the customer. This can help balance transaction costs between the parties.
- Availability of Various Payment Methods: Thanks to the Authorization Fee, merchants can continue to offer customers high-cost payment methods without burdening their budget with transaction fees.
- Price Transparency: With the Authorization Fee, the customer is aware of the costs associated with payment processing, which can contribute to greater price transparency in the store.
- No Additional Settlements: By enabling the Authorization Fee in your plan, you don’t need to reconcile your company with the commissions charged by ZEN.
The Authorization Fee is activated at the payment channel level, and this service is not set as the default option. Settings can be changed at the merchant’s request depending on the payment method. To make changes, the merchant should contact our merchant support via [email protected], providing information about which method should be configured.
There are two options in which our system can calculate the fee for each transaction:
- Default Setup: The fee for payment processing is deducted from the transaction settlement transferred by ZEN to the merchant.
- Authorization Fee: ZEN collects the Authorization Fee from the payer as an addition to the product price requested by the merchant. The fee collected from the merchant is equal to 0 (zero).
Below, you can find an example to better understand this service:
Disclaimer- into following calculation only Authorization Fee was taken into consideration. With real-life settlements more factors are included.
Merchant sells product for 60.20EUR and buyer decides to choose method that has 5% commission.
Buyer pays 60.20EUR. Merchant is settled with 57.19EUR (60.20EUR*(100%- 5%))
60.20 EUR is 100% of the amount
5% commission of 60.20 is 3.01EUR
Buyer pays 63.37EUR (60.20 EUR merchant’s price, and additionally 3.17 EUR Authorization Fee to ZEN)). Merchant is settled with 60.20EUR
60.20 EUR is 95% of the amount
5% is of the full amount is 3.17EUR
For checkout integration, the process of calculating fee for both scenarios is done automatically and no additional actions are required. This applies to both Checkout Integration and Plugin Integration
For API integration:
-the process where fee is calculated after the payment is made and subtracted from the total amount is done automatically by our system
-the process where Authorization Fee is in place requires dedicated API request to calculate Authorization Fee value for the given transaction. This value is later used with the transaction request (POST /transaction)
For more information check our “Authorization” chapter of API Integration