That depends on where you are. But all the major networks expect auths before capture, even if it isn’t technically enforced, and will punish gateways and merchants who have low auth rates.
Auth before capture doesn’t generally reduce interchange. What it primarily does is shift liability in the event of a dispute. If a chargeback is raised, and no auth happened, then the merchant simply looses immediately. They have no mechanism for fighting the chargeback. If they auth first, and got an approval, then it’s the banks problem in the event of a customer dispute. The merchant can reply to the chargeback by pointing out the valid auth they received from the bank, and the bank has to go pound sand.
You may see this as different “interchange” rates from a specific gateway. But that’s simply not true at the network level. The difference in pricing just exists so the gateways themselves can price in the additional risk associated with auth less captures, given the gateways are always on the hook, even if a merchant goes bust. The major networks force gateways to have funds kept in escrow that are guaranteed to cover any shortfall that might occur due to individual merchant failure, or failure of the gateway itself. That how networks make sure that zero real risk every accrues with them, they make everyone else put up huge stacks of cash to ensure that every virtual cent that’s in flight at any moment, is backed by a real cent in escrow somewhere.
Auth before capture doesn’t generally reduce interchange. What it primarily does is shift liability in the event of a dispute. If a chargeback is raised, and no auth happened, then the merchant simply looses immediately. They have no mechanism for fighting the chargeback. If they auth first, and got an approval, then it’s the banks problem in the event of a customer dispute. The merchant can reply to the chargeback by pointing out the valid auth they received from the bank, and the bank has to go pound sand.
You may see this as different “interchange” rates from a specific gateway. But that’s simply not true at the network level. The difference in pricing just exists so the gateways themselves can price in the additional risk associated with auth less captures, given the gateways are always on the hook, even if a merchant goes bust. The major networks force gateways to have funds kept in escrow that are guaranteed to cover any shortfall that might occur due to individual merchant failure, or failure of the gateway itself. That how networks make sure that zero real risk every accrues with them, they make everyone else put up huge stacks of cash to ensure that every virtual cent that’s in flight at any moment, is backed by a real cent in escrow somewhere.