What is the dollar amount set as "pre-auth" for transaction authorization by MasterCard and Visa?

The correct dollar amount set as "pre-auth" for transaction authorization by MasterCard and Visa is indeed $50. Pre-authorization, often referred to as “pre-auth,” is a method used by merchants to ensure that a customer's account has sufficient funds before completing a transaction. This amount serves as a temporary hold on a customer’s funds, signaling that the transaction amount is covered.

The reason $50 is utilized aligns with typical transaction sizes and helps mitigate risk for both the merchant and the card issuer. By maintaining a reasonably conservative threshold—like $50—credit card companies can efficiently manage the potential for fraud while allowing merchants to complete transactions in a timely manner. Under this pre-authorization system, the $50 threshold strikes a balance between security and customer service, allowing for most low-to-moderate transactions without necessitating a full charge immediately.

Overall, understanding this amount is essential for professionals in the electronic transactions and payment processing industries, as it helps in managing transaction protocols effectively.