# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Negative Authorization

Written By
Paul Tracy
Updated January 16, 2021

What is Negative Authorization?

Negative authorization is the term for a credit card system that approves or disapproves a credit card transaction based on whether the card appears on lists of stolen, canceled, closed, or lost account numbers.

How Does Negative Authorization Work?

For example, let's assume John purchases $200 worth of widgets at Sears. He pays with his Visa card. If the card approval system uses positive authorization, it will check John's credit card account to see if he's gone past his limit, used an expired card or supplied an address that does not match his account. The system will do this as a condition of approving the charge.

If the card approval system uses a negative authorization, it essentially compares John's credit card number to a list of "bad" card numbers (closed, lost, stolen, or canceled) and approves the transaction if his card number is not on those lists.

Why Does Negative Authorization Matter?

Negative authorizations intrinsically are less secure than positive authorizations.

Ask an Expert about Negative Authorization
At InvestingAnswers, all of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Negative Authorization.
Be the first to ask a question

If you have a question about Negative Authorization, then please ask Paul.

Ask a question

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

If you have a question about Negative Authorization, then please ask Paul.

Ask a question Read more from Paul

Read this next

Paul Tracy - profile
Ask an Expert about Negative Authorization

By submitting this form you agree with our Privacy Policy

Share
close
Don't Know a Financial Term?
Search our library of 4,000+ terms