The real problem with “AI Smart Coolers” — Why Pre-Authorization Holds Break the Smart Cooler Experience

The Problem with Pre-Authorization

Pre-authorization was originally designed to secure funds before a transaction is completed, ensuring that payment can be processed once the final amount is known. While effective in traditional retail or service environments, it creates significant friction in unattended or automated systems like AI Smart Coolers.

When a pre-authorization is placed, a temporary hold—often higher than the expected purchase amount—is applied to the consumer’s card. This can lead to customer confusion, as they see a larger pending charge than what they actually spend. In cases where the final transaction is lower, the excess authorization remains held until the issuer releases it, which can take several business days.

For high-frequency or low-ticket environments, this process causes additional complications. Customers may face delayed access to their funds, multiple pending charges, or declined transactions if they reach card limits prematurely. From the operator’s perspective, it can lead to unnecessary customer service issues, longer settlement times, and potential revenue loss if authorizations expire before capture.

In modern unattended retail, where convenience and trust are critical, traditional pre-authorization methods are increasingly outdated. They fail to reflect real-time purchasing behavior and often create an unnecessary barrier between the customer and a seamless payment experience.

• A hold sits on the shopper’s card—like a hotel deposit—until the issuer/acquirer releases it.
• Operators, manufacturers, and processors can’t control when those holds drop; each card network/issuer has its own timing.
• Result: frustrated customers, pending charges on statements, and lower repeat visits.

Our Fix: Incremental Pre-Authorization With Instant, Accurate Settlement

Incremental pre-authorization lets the system start with a small entry hold—just enough to unlock the cooler—while increasing the approved amount only if the shopper’s final total exceeds that initial hold. This avoids the oversized deposits traditional systems rely on and gives operators the flexibility to capture the actual purchase amount without interrupting the customer’s flow. Paired with instant settlement, the final charge reflects the true total immediately, eliminating overcharging, reducing lingering holds, and keeping statements clean. If no purchase happens, the pre-authorization simply expires according to the issuer’s rules, leaving shoppers with a smooth, low-friction experience. With support from Nayax VPOS Touch and Castles S1U2 hardware, ReyVend delivers real-time accuracy, faster settlements, and a walk-away checkout experience built for modern AI Smart Coolers.

Unique Differentiator — Incremental Authorization

Incremental Pre-Authorization/Minimal Entry:

Minimal entry on incremental authorization allows smart cooler owners and operators to place a small initial hold on a customer’s card and then increase the authorization amount in real time as purchases occur. This ensures that only actual transactions trigger incremental authorizations, enabling precise and transparent billing while reducing unnecessary card holds. At the end of the transaction, an exact capture of the total purchase amount is processed, and if no purchase is made, the issuer releases the authorization according to its policy.

This process, known as incremental authorization, offers flexibility for merchants and convenience for customers. By starting with a minimal authorization amount such as five dollars and increasing it only when additional purchases are made, merchants can maintain better control over funds while providing a smoother and more adaptable payment experience. It reduces declines caused by underestimated pre authorizations and ensures the final charge accurately reflects the customer’s actual spending.

For operators, incremental authorization reduces operational risk and improves approval rates by aligning authorizations with real-time spending behavior. For customers, it prevents large or unnecessary pre-authorization holds from affecting available funds, creating a seamless transaction experience from entry to final capture.

Incremental authorizations are especially valuable in dynamic pricing environments where transaction totals may change after the initial authorization. This applies to industries like hospitality, car rentals, fuel services, vending, and e-commerce—where additional purchases or service extensions are common. By using incremental authorizations, merchants can streamline transaction flows, reduce customer friction, and ensure accurate final settlement.

Ultimately, incremental authorization strengthens trust and efficiency in payments. It helps businesses manage risk, improve authorization success, and enhance overall satisfaction for both merchants and customers.

Results

By implementing incremental pre-authorization and instant settlement, ReyVend has resolved one of the most common pain points in unattended retail payments. The solution has led to faster transaction approvals, improved customer satisfaction, and fewer disputes caused by confusing pending charges or delayed refunds.

Operators now experience higher authorization success rates and lower instances of expired or unused holds, resulting in more consistent revenue capture and cleaner reconciliation. For consumers, the process feels seamless—only the exact purchase amount is charged, and funds tied up in unnecessary holds are eliminated.

Together, ReyVend’s integration with Nayax VPOS Touch and Castles S1U2 establishes a more transparent, reliable, and scalable payment framework for AI Smart Coolers—setting a new standard for trust and efficiency in autonomous retail.

Incremental Authorization FAQs:

1. What is incremental authorization?
Incremental authorization is a payment feature that allows a merchant to increase the originally approved transaction amount when the final purchase total is higher than the initial pre authorization. This ensures additional funds are reserved without creating a new transaction or asking the customer to reauthorize.

2. Why do businesses use incremental authorizations?
Businesses rely on incremental authorizations for transactions where the final amount is unpredictable, such as hotel stays, car rentals, vending purchases, self checkout kiosks, and online orders. It helps avoid payment declines and supports a smooth, uninterrupted customer experience.

3. Does an incremental authorization replace the original authorization?
No. Incremental authorizations are added on top of the initial authorization. Combined, they represent the full approved transaction amount.

4. Does an incremental authorization extend the validity of the original pre authorization?
No. The original pre authorization keeps the same validity period. Incremental authorizations only raise the approved amount and do not extend the settlement window.

5. Which payment networks support incremental authorizations?
Major card networks support incremental authorizations, including Visa, Mastercard, American Express, Discover, JCB, Diners Club, and UPI.

6. How do incremental authorizations benefit customers?
Customers benefit from smaller entry holds, such as five dollars, with the remaining balance added only if they purchase more. This improves transparency, reduces unexpected pending charges, and creates a more comfortable shopping experience.

7. Are incremental authorizations common in vending or unattended payments?
Yes. Incremental authorizations are increasingly used in vending machines, parking systems, smart coolers, and other unattended retail environments to manage variable transaction amounts while minimizing large card holds.

8. When did Nayax introduce incremental authorization for vending machines in the United States?
Nayax introduced incremental authorization for EMV compliant multi vend vending machines in the United States in 2022.

9. What makes incremental authorization different from traditional pre authorization holds?
Traditional vending systems place a large hold at the beginning of a session. Incremental authorization starts with the lowest priced item and increases the approved amount in real time as the customer selects more products.

10. How does incremental authorization improve customer experience?
Customers enjoy a smoother cashless vending experience because they avoid large pre authorization holds. The transaction settles for the exact amount purchased, reducing confusion and encouraging larger basket sizes.

11. Where else is incremental authorization used?
It is common in industries like fuel payments and parking, where the final cost is not known until the transaction is complete.

12. Why is incremental authorization valuable for food and beverage vending?
It removes issues such as overdrafts, confusing pending charges, and inaccurate pre authorization holds that created negative customer experiences in traditional multi vend systems.

13. What hardware supports incremental authorization in vending?
Incremental authorization is supported on EMV tap and insert credit card transactions when vending operators use the Nayax VPOS Touch device.

14. What advantages does incremental authorization bring to vending operators?
Operators see higher average transaction values because customers feel more comfortable selecting multiple items. Smaller holds reduce chargebacks, lower support inquiries, and improve overall satisfaction across unattended retail locations.

6 Other Reasons Why ReyVend Technology Is Better:

1. Easy Setup (No AI Training Required): You don't need to know or train AI, as we provide thousands of pre-loaded products—the machine learning is done before you even receive your unit.

2. Vision-Only AI: ReyVend's superior computer vision uses high-resolution cameras and advanced AI to identify specific products with over 99% accuracy, completely replacing the need for complex weight sensors.

3. Gravity-Fed Shelving AND Push Plates: ReyVend uses a dual system of gravity-fed shelving and push plates, ensuring the product is always perfectly faced and available, even when consumers bypass the push plate.  

4. Anti-Theft Features: The AI system audits the machine by comparing snapshots taken right before and right after the door is closed, ensuring the transaction is accurate and verifying what was taken even if the cameras were temporarily blocked.

5. Transparent Pricing: With a fully integrated mobile application, we provide clear and easy-to-understand pricing, so we don’t make figuring out software and transaction costs a guessing game.

6. All glass-front: We ensure the technology looks good by concealing the compressor and moving the ventilation to the back, which makes the unit sleek and allows for a visually dominant, all-glass front design.