Which statement about an authorization only (Auth Only) transaction is correct?

An authorization only (Auth Only) transaction primarily serves the purpose of checking the validity of a cardholder's account. In this process, the merchant requests authorization from the card issuer to confirm that the cardholder has sufficient funds or credit available, and that the account is active. This type of transaction does not involve the immediate transfer of funds; instead, it merely holds a certain amount of funds for a short period until a capture transaction is executed, if necessary.

The significance of this process lies in its ability to allow merchants to ensure the customer can pay for the goods or services before they finalize the transaction. This is particularly useful in scenarios where the final transaction amount may vary, such as in hotel bookings or car rentals.

This context distinguishes it from other options, such as stating it's the most commonly used transaction type or that it can only be initiated by the cardholder, as those do not accurately reflect the function or nature of an Auth Only transaction. Instead, the focus here is on the validation of the account, which is central to the concept of an authorization only transaction.