So not only does an authorisation hold guarantee a future expected payment, it can also be used as a deposit to cover potential losses.
There are other advantages too:
Avoid the hassle of refunds: If there’s a problem with a service that the business would need to cover, it is more convenient to release a preauth back to the customer’s account than refund a fully authorised payment. Refunds are notoriously slow to process (can take 2-3 weeks) whereas a cancelled preauthorisation is available to the cardholder within a few days.
Prevent chargebacks: Since preauthorised funds are not a completed transaction yet, the customer cannot dispute it with their bank, which would result in a chargeback and fee for the business. In contrast, if you took a normal card payment upfront for a future service, the customer could dispute it with their bank, for example with the excuse that you didn’t provide the service.
Avoid fraud: If you’re accepting preauthorisations online without a customer interaction, a preauthorisation allows you to check an order, contact the cardholder and cancel the payment if something appears suspicious. In other words, it acts as a buffer during which you can weed out fake from genuine transactions.