Zero Dollar Authorization (ZDA)

Zero Dollar Authorization is a type of authorization request sent to a cardholder’s issuing bank for verification purposes, with no actual charge to the cardholder’s account. These transactions are typically used to verify aspects of the cardholder’s information, including the following:

  • card validity
  • address verification
  • cardholder identity

A ZDA typically includes an Issuer’s Response Code, signaling that the card is not lost or stolen, and other responses that aid in fraud detection. It’s important to understand that this is not an actual charge, but rather a hold that’s placed on the card to ensure its validity.

This method is often employed by businesses at the time of booking or renting — like hotels or car rentals — to ensure the customer’s payment card is valid. It is also utilized in scenarios where recurring payments will be made, or in online scenarios where the customer’s card cannot be physically verified.

Merchants find this method helpful as it helps them to avoid costly chargebacks or fraud. It’s an effective fraud prevention tool that also helps in validating the cardholder’s data without making an actual transaction, making it an essential tool in a merchant’s payment processing toolkit.