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What happens if the currency exchange rate changes before an authorization is cleared?

If an exchange rate changes after a merchant submits an authorization in an alternate currency, but before they submit the clearing, the amount in the clearing message will reflect the more recent exchange rate. Any difference between the authorized amount and the clearing amount is held until the authorization expires, usually after seven days.

Note: In general, the time between authorization and clearing is not long enough for meaningful changes in exchange rate.

For example, imagine a cardholder with an account in US dollars makes a purchase from a merchant located in the United Kingdom. The cardholder billing currency is US dollars. The merchant submits an authorization in US dollars for the equivalent of the original transaction amount in pounds sterling. For this transaction, a £100 purchase equates to an authorization of $130, due to the exchange rate. If the exchange rate changes afterward, so that the £100 purchase now equals $129, the clearing transaction will be for $129. The remaining $1 hold is released after the authorization expires.

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