API: The term "API" is an acronym for application programming interface. APIs allow computers from two different systems to communicate using a common protocol. In the case of PayPal, Yahoo! is using several PayPal APIs to make calls (requests) to PayPal to facilitate PayPal transactions between buyers and merchants.
Authorization: An authorization is made when a buyer places an order with a merchant. The funds for the order are put on hold for an honor period of three days. PayPal will return an Authorization ID that is used when the merchant captures funds.
Capture: When a merchant captures funds, they are placing a request to PayPal to process a pending authorization/reauthorization. If successful, capturing funds moves the funds specified from the buyer's account/funding source to the merchant's account.
Honor period: The term "honor period" is defined at the time, in this case three days, during which PayPal guarantees 100% of authorized funds. Merchants are advised to capture funds if possible during the honor period or to perform a reauthorization.
Random Deposit Verification: The process by which PayPal verifies an account to which a bank account has been added, by making small random deposits that the account holder needs to confirm. The process of verifying bank accounts adds a greater degree of security.
Reauthorization: Merchants reauthorize an order to verify that funds are available to capture. Reauthorizing an order when successful creates a new honor period during which funds up to 100% of original authorization total are guaranteed by PayPal to be available. Reauthorizing will create a new transaction ID, which will appear in the Payment section of the order in the Order Manager.
Seller Protection Policy: The Seller Protection Policy is meant to provide merchants that follow specific selling practices with protection against fraudulent payments. Consult the Seller Protection Policy for terms and conditions.
Transaction settings: Merchants can select PayPal transaction settings to either capture funds automatically (default) or authorize and then later capture funds. Merchants can access these settings in the Payment Center by clicking the Edit button that appears after clicking the name of the account they wish to edit.
Void: By voiding an authorization, merchants release any funds reserved during the honor period. Merchants can only void an authorization, not funds that have already been captured. If you have captured funds that you wish to return to the buyer, you will need to issue a refund.