An Authorization Code is a code that is usually made up of numbers. This is given to an individual when in a domain a transaction has been authorized. The other names for Authorization Code are Approval Code or Authorization Number.

6 - 16 characters make up the authorization code. The registrar assigns it at the time of creation of the domain name.

Each domain name has an authorization code that is unique to it. In order to be able to access the domain you use the authorization code like a password. You get additional security by using the Authorization codes as transfers can be made only by the domain owner

Domain names also have authorization codes assigned to them to stop transfers that have not been authorized

Authorization codes are also used by Travel insurance companies so that they can receive payment from clients through their credit and debit cards. To balance it off they pay card association and processing fees.

More Glossary Terms Explained here