A pre-authorized payment (PAP) is a financial transaction in which one organization withdraws funds from a payers bank account, with the payer having advised the bank that they have authorized the payee to directly draw the funds. It is also called pre-authorized debit (PAD).

A pre-authorization charge, on the other hand, is a temporary hold placed on a customers payment card by a merchant for certain transactions. It ensures that the account is valid and has sufficient funds to cover a pending transaction, without actually debiting the cardholders account upfront. The hold typically lasts around five days, though this depends on the merchant classification code. Pre-authorization charges help guarantee that customers are committed to paying for the service or product, and can reduce the risk of non-payment or default.

In summary, a pre-authorized payment is a type of direct debit where the payer authorizes the payee to directly draw funds from their bank account, while a pre-authorization charge is a temporary hold placed on a customers payment card by a merchant to ensure that the account is valid and has sufficient funds to cover a pending transaction.