A pre-authorization is a card transaction in which a merchant asks the issuer to approve and reserve an amount without yet taking it, and the reservation it creates on the cardholder's account is the authorization hold described in the main entry. Pre-authorization is the merchant's name for the request; authorization hold is the name for its effect on the cardholder's available balance.
Merchants use it when the final amount is unknown at the start: a hotel at check-in, a car rental desk, a fuel pump before filling, or an online shop that charges only when goods ship. It is an ordinary payment authorization flagged as an estimate. The merchant later completes it with a payment capture for the actual amount, raises it with an incremental authorization if the bill grows, or cancels it with an authorisation reversal so the funds are released. Card networks set time limits within which a pre-authorization must be completed, which vary by merchant type.
The term should not be confused with a preauthorized debit, which is a standing permission for a company to collect payments from a bank account, nor with pre-approval of a loan or insurance claim.