DEBIT CARD HOLDERS: Gas sellers put hold (up to $75) on debit cards

[Bozita]

This was reported in LBN a couple of days ago. CBS Evening News will be doing a story on this outrage tomorrow.

Oh yeah, can anybody inform me as to just how this "safeguards both cardholders and merchants"?

Here's the most current print article:

http://www.pennlive.com/business/patriotnews/index.ssf?/base/business/1126689754281120.xml&coll=1

Gas sellers put hold on debit cards

Wednesday, September 14, 2005

BY APARNA KUMAR
Of The Patriot-News

If high gasoline prices aren't enough to cramp your style, consider this: Up to $75 may be temporarily frozen in your bank account if you pay at the pump with a debit card.

That's on top of whatever you pay to fill your gas tank.

"The intent is to safeguard both cardholders and merchants," said Jason Kirsch, a spokesman for Commerce Bank/Harrisburg.

The practice is nothing new. But many consumers have no idea that their money may be put on hold as a security measure so they don't pump more gas than they can pay for. The money may be frozen for an hour or for days -- until the transaction between the bank and the gas station is posted.

more...

[regnaD kciN]

1. There was a similar story in the Seattle P-I...

...about restaurants that automatically freeze credit-card funds for their bill plus an automatic 20% tip when you first hand them the card. Supposedly, the auto-tip is removed when they finalize the transaction after you have added a real tip and signed the receipt. But that might take many days and, if you decide not to put a tip on the receipt, some restaurants and/or credit card processors interpret that as you being fine with the 20%, and so they leave it on.

[FreedomAngel82]

2. It seems to me

that everything is now fucked up. *sigh* :cry:

[johnaries]

5. Having been a waiter, they HAVE to run the card through to get

authorization. Since they don't know how much you plan to tip they will run it through with the STANDARD 20% tip included. The Credit Card company will adust the amount when they receive the signed slip.

[sandnsea]

6. The STANDARD used to be 10%

Then it went up to 15%, and only the most elite of restaurants added a compulsory 20% tip. The price of the meal went up, your percentage went up; my income is almost exactly the same as it has been for nearly 20 years and I'm not even on a fixed income.

Welcome back to reality.

[serryjw]

38. I posted this a year ago...

They do it on food delivery also. IF you NEED that extra 20% to cover other transaction you are S*IT out of luck, you will get a bounce check charge. I was PISSED that a massage place did this to me last year. I paid the bill(after the massage!) and the tip was given in cash and they still added the 20% which I didn't get back for 4 days until it clears the V/MC network( It was $20)....be very careful when you use your bank debit card if you have small balances in your account

[SeattleGirl]

3. Thanks. I was wondering why

my "ledger balance" was different than my "available balance". The available is about $75 lower than ledger. Now I think I know why, as I just bought gas the other day.

[chalky]

4. This is CRAP! But explains a lot.

I've also wondered about the difference between actual balance and available balance when I've checked my account.

And now they can hold up to $75.00??!!?? I usually don't write checks, but how will this affect my automatic withdraws?

[Wildewolfe]

16. ok...

Actual balance is the amount of money currently in your account.

Available balance is actual balance minus any outstanding credit authorizations and open to buys.

Checks and payments are authorized off the AVAILABLE balance. Too many open to buys can and does cause failed payments and bounced checks.

Realize too though, that the $75 hold is usually quite transitory. Lasting from the time you swipe your card till a minute or so after you hang up the handle. Again this can vary though. If a station is having problems talking with the authorizing network the hold can last hours, but you have to realize even there that debit is a positive authorization card without fallback (meaning that the station HAS to talk to network to authorize your card to begin with) so the chance that the comm will fail after you swipe but before you handle down is actually quite small.

Again, the danger with open to buys, isn't so much Gas stations. It's car rental and hotels that may put hundreds of dollars on open to buy for the duration of your rental/stay.

[uncle ray]

18. that's not that much gas anymore, remember?

about a week ago, i was in the gas station, the lady THANKED me for actually paying! she was almost in tears, said she just had a $70 drive-off.

so i have no rpoblem with the hold, though the time period is a good question to get to the bottom of. but then i've taught myself to use cash almost exclusively, i'm more aware of what i spend on a daily basis when you count out every dollar as opposed to a card swipe.

[NVMojo]

7. what a crock of crap!

[Wildewolfe]

8. I work in the industry...

... and for fuel purchases it's not nearly as bad as you think and has worked that way for years.

When you dip your card at the pump initially you aren't paying for the fuel. It's preauthorizing your card. Or seeing if you have enough money available in your line of credit (in the case of credit cards) to cover the projected maximum average fuel transaction.

In the case of a debit card, it will put an "open to buy" on your account for the preauth amount. Depending on the station you are going to, that amount can be $50 to $100. This puts a temporary hold on that amount of funds in your account. This protects the store by preventing a person with $100 in their debit account from authorizing 3 or 4 pumps simultaneiously without the actual funds to pay for the fuel.

Now if you don't actually dispense the fuel, the transaction will time out and a zero dollar finalization will go up and that will clear the open to buy. If the station has a reset or something the open to buy usually clears within an hour or so of no activity (varies from credit network to network).

Once you dispense your fuel, a finalization transaction goes up for the actual amount of purchase debiting your card and clearing the outstanding open to buy.

There really isn't another feasable way to do this type of transaction that protects the store owner from massive fraud and doesn't hit the user with massive inconvienence.

I've been in this industry programming these systems for 15 years now so I have a bit of experience with it. It's nothing new the process is essentially the same today as it was 10 years ago. What is different is due to the price per gallon, the preauth amounts that used to be $35 are now raising to $50, $75 or even $100 so that a customer can usually fill their tank on one dip of the card.

The real danger, though of "open to buys" is on car rentals. Try not to rent a car with a debit card cause they will play a many hundreds of dollar open to buy on your account which will last the duration of your rental, which if tied to your primary checking account could cause you to bounce checks even with adequate funds in the bank.

[chalky]

9. Thanks for the answers, Wildewolfe. Another question:

In your experience, how does having a $75 or $100 hold on $20 worth of gas affect any automatic withdrawals from a bank account? Especially if that hold can last for a week?

Have rented with my debit before, and (thankfully) they warned me up front about the $200 hold on funds to my account. At least Enterprise did.

[Wildewolfe]

13. A hold affects

... your available balance...

So if you have 1000.00 in your account, and you rent a car with them placing a 200.00 hold on your account you would still have 1000.00 in your account, but your available balance would be 800.00.

Now how the bank actually will handle automatic withdrawals and such will depend somewhat on your individual bank and things like overdraft protection. A common scenario without a nice bank and without overdraft protection though would easily have you thinking you have 1000.00 to play with and every check you write over that 800.00 would bounce while the open to buy is still on the account. The same could happen with automatic payments.

[chalky]

17. Yikes! Thanks for the info.

n/t

[ComerPerro]

20. Exactly. Thanks for the answers

[serryjw]

42. NOT exactly.........

I sold V/MC merchant services for years. When you use your V/MC debit card it is an off line approval. They have no way to KNOW if the money is in the account. IF it isn't the merchant will get paid and you will get a bounce check charge for the overdraft. The money that is reserved will stay debited in the account UNTIL the actual transaction goes thru the clearninghouse (settlement), usually 3-4 days

[Wildewolfe]

46. could be,

But no major oil sponsored network will offline approve a debit card period (when process AS a debit card). The fraud occurance is too high.

Now running a dual use card (a card than can be processed as either a debit or a credit card) you can still do as a credit card.

They do that by assigning a floor limit to the card. Say $25.00 or $50.00 to a card type and if the network is not online for approval, then the card may be approved in fallback. In this case the scenario you describe would indeed happen. But realize, the card is not being run through as a debit card with the network offline, they are being processed as credit. Only one network I've ever worked with even had the tools to do that with offline Atallah key processing and such. Master/session and DUKPT pinpad key management basically prevent that from being a real option (nerd talk...ignore).

The common method used these days works basically like this:

1 - Swipe your card - determine debit or credit
2 - If network up request authorization
3 - if network down and debit, decline with network unavailable message
4 - if network down and credit, follow offline logic and approve if under floor limit, if over floor limit, call for authorization.
5 - if network up and approves process transaction, if decline, decline transaction with appropriate message.

(there are a lot more steps than above, that's just a simplified generic version)


Now there still are some terminal boxes out there that will do an offline approval, but they are becomming rarer and rarer as Visa and MC both tighten their rules up trying to eliminate the process. For the most part everything these days at least attempts online approval.

[serryjw]

50. I bank with US bank

I run 2 checking accounts and nightly transfer funds from one to the other. I have run hundreds of dollars over (covered it at night thru the transfer)using it as a credit card. What surprised me recently was I was able to use the card as a debit, got cash back and didn't have the money in the account that the debit card was assigned to! US Bank said it would work IF I was not overdrawn!Obviously they are NOT checking balances.

[stlsaxman]

51. I've lost a full weeks paycheck TWICE because of US Banks practice of

holding deposits for up to 72 hours, sending any and all withdrawals back to my debtors as "insufficient funds". for each payment sent back a charge of $25 was immediately withdrawn from my account. an absolutely criminal practice that my "personal banker" could do "absolutely nothing" to redress.

I got out of that hell hole before the "Bank21" laws went into effect... *shwew*

[serryjw]

53. I have heard all the horror stories

but they have been reasonable to me considering I have no money in either account!

[stlsaxman]

56. wow, hope your run of luck holds up...

but were I you, I'd get while the gettin' good!

Good for you, nonetheless!

[OmmmSweetOmmm]

10. Perhaps it's a NY "thing" but when you use a debit card to pay for gas

they ask you to punch in how much gas you want (ie $20) and the pump will only go up the amount you choose.

[durablend]

11. You're prepaying the gas

You're actually paying (then) for what you want by telling the pump how much you want.

The easy way around all this (though more inconvenient) is to not swipe the card at the pump but pay inside after you're done.

[Wildewolfe]

14. That is less and

... less avail available nationwide. Postpay fueling (paying for the gas after fueling) is disappearing quickly nationwide to combat an increased rate of drive off without paying.

Expect to see most locations become pay at the pump/prepay only.

[northzax]

32. I was in Wisconsin last year

and actually found a post-pay station. I hadn't seen one of those in years.

[Wildewolfe]

37. they are disappearing...

.. all over...;(

[LeftyMom]

52. We haven't had stations like that here in probably 15 years

I'll keep this in mind and try to remeber to stop at the ATM first and buy gas with cash.

[annabanana]

12. I can't gas up both cars on the same day..

at our regular station because of this nonsense..

[Wildewolfe]

15. It might be a different reason...

... if you have enough funds in your account to cover 2 of the preauth amounts, and this still happens, it's likely you are being caught by something call velocity fraud checking.

That means that the same card can only be used x time(s) per period of time at that station.

This was put in place by the companies to combat some criminal fraud rings that would fake a card, leave it on top of the pump and then use them all day long to fill fleets of cars (cab drivers in Chicago if I recall correctly).

The big thing to remember here though is this is done by credit network. Shell uses one network, BP a different one, Amerada Hess uses a third etc...

If you can't do it at one brands station go accross the street to another brand.

[mtnester]

41. This is BS crap if you run a service business and have a work vehicle

you cannot get more than $75.00 worth of gasoline at a time. Now, I know that sounds like a lot, but if you are filling up a wrok vehicle with todays prices, it does not fill up a pickup truck tank in my area if you are using a company debit card to pay.

No one ever even thinks stuff like this through when they make up this spur of the moment crap.

On edit, it goes beyond what everyone is talking about when I refer to the &75.00 cap with debit. Even though we have a major balance in our company checking account, we CANNOT PUT MORE THAN $75.00 ON OUR DEBIT CARD AT GAS STATIONS. Now, we put more than a thousand on one just today to buy small parts, but could not do more than $75.00 on it for gas. We cannot pump beyond that dollar amount using debit. We can using a Visa or MC charge card, however.

[AllegroRondo]

19. Debit transactions process almost instantly

so "freezing" your money for days sounds very odd.

[Wildewolfe]

22. ... the freeze is there to ensure

... that when the collect is finally done that there is actually money there to pay for goods/services you contracted for.

In the case of a gas station the freeze is usually pretty short.

In the case of car rentals and hotel stays they can last for days as in effect that hold is your DEPOSIT on those services.

If you rented with cash (if anyone still lets you) you would be putting up a cash deposit so it's really no different if you are aware of what is going on. It's really folks that don't understand how those work that get nailed.

[toey]

21. what if you run your debit card through as a credit card? same result?

[Wildewolfe]

23. Pretty much...

...the card is still tied to you bank account. The actual funds though for a credit transaction are not removed from your account until the store goes through a settlement process (normally, again this can vary network to network). The transaction still immediately effects your available balance though.

Note also, that Debit transactions sometimes have a debit fee associated with them. This is an additional fee for processing the transaction that YOU pay. In California at Arco stations this fee is like .35 per transaction. On a credit transaction the retailer pays the fees.

[LSK]

24. im glad im one of the last 5 people on earth without a debit card

Call me old fashioned, but I still take my paycheck to the bank every week and take out enough cash to get me through the week. I DO NOT NEED corporations or any businesses dipping into my bank account.

[Wildewolfe]

26. they already do...

...you just don't see it paying cash.

Everytime a person uses a credit card to make a purchase the merchant is charged either a fixed transaction fee or a percentage of the sale as a fee. That's how the credit card hosts make their money. You the cash payer contribute to that by subsidizing higher prices that result at the store level because of those fees.

The debit fee though actually was a good thing. In California, Arco in the 90s didn't even take credit cards. Only debit, and they charged you a quarter for every transaction and kept their costs on fuel generally 3 to 4 cents per gallon lower than their credit accepting competitors. In addition on a debit card you could get cash back on the transaction avoiding the higher interest rate you as the consumer would pay for a cash advance on a credit card and avoiding ATM fees. It was a good model for everyone honestly.

Sometimes fees can be a good thing...;p

[LSK]

28. so the merchant has to charge higher for everyone because I pay cash??

Because he cant charge his fixed transaction fee???

[Wildewolfe]

29. The merchant...

.. has to hit a sustained profit margin to stay in business. He has to make x dollars above the cost of doing business. ANY increase in the cost of doing business (which the percentage the credit card company takes would qualify as), results in either lower profits for the store or higher prices to the consumer (which do you think is going to happen?...;PP)

Years ago, you used to see a higher price per gallon charged to credit customers than to cash customers (incidently in most places I've seen Debit cards are treated as CASH tenders), but the public as a whole didn't like it, and it's fallen way out of favor, though you still see it from place to place.

That means the cash using customer is paying a higher average PPG than he would have too in the two tiered price model and it's to help support the credit paying customer (or in reality, to still hit the profit margin target for the individual site).

Make no mistake about it though, you are still paying for it using cash.

[LSK]

30. but paying cash supports the merchant and not the bank

Would that be a fair statement? Either way it sounds like they are going to get their money out of you I guess.

[Wildewolfe]

31. Yes and no

... depends on whether the station is company owned, leased, franchised or a no brand.

If you go to a Shell station, it could be owned by the Shell Oil corporation, it could be leased from them, it could be franchised from them etc. In other words someones is going to get that exta bit of money, but you probably won't know who unless you do research on who the actually owner/operator is. Even if you do, most company owned stores for the majors that do franchise, franchise to themselves through a locally owned operations company that is still wholly owned by the parent oil company.

If you are really wanting the extra money to stay local then go with the no brand station. Just so you know, the gas they sell is exactly the same gas that's sold down the street at the branded site. The ONLY thing that varies is the additives that are put into the fuel to make them brand specific. The base gas is exactly the same. (with one exception. Amoco (now bp) gold is really specific to them and specially refined... or used to be at least).

[noiretextatique]

25. i'll be paying with cash from now on eom

[Wildewolfe]

27. Well... there is a flip side to it too though ...

If you pay with cash, you are at the mercy of the merchant to deal with any unsatisfied experience (product doesn't work etc).

When you pay with credit, you do have some additional consumer protections that come into place. You can dispute charges (and savvy consumers win a dispute more oft than not if it's legitimate) and may have, depending on the card you use, significant buyer assurance protection.

Plus, unlike cash, if the card gets stolen and you report it, your liability is extremely limited and the card gets replaced fast. Stolen cash is just lost.

So there are good things and bad things to both sides. Education on the methods used and what specific rights and benefits YOU receive from your cardholders should be your guiding light as to whether or not to use them or not, not just an arbitrary I'm going to use cash statement.

[Rainscents]

33. I understand what you're saying... I would much rather pay buy CASH only!

[Wildewolfe]

35. Certainly ...

.. a valid choice...

[noiretextatique]

49. i'm talking about buying gasoline

per the article in the original post about debit cards used for gasoline purchases.

[stlsaxman]

54. waitjustaminutehere-

if i buy my gas with cash- "If you pay with cash, you are at the mercy of the merchant to deal with any unsatisfied experience (product doesn't work etc)".

So why wouldn't the gas "work"? or my cigarettes? If I get a receipt for a cash transaction and the gas doesn't work, how can a credit card company be of more assistance?

"Damn- if only I knew these cigarettes I got from the gas station wouldn't work- I woulda used my credit card!"

:rofl:

Credit cards are evil, evil things.

[Cleita]

34. Not only that. The last time I bought gas, they charged me

35 cents for the transaction. It's cash for me from now on.

[Wildewolfe]

36. I presume that was a debit transaction fee?

... realize you can get cash back usually if you pay inside with a debit card. 35cents is a damn small ATM fee if you need a bit of cash. Use the ATM in the store to get the cash to pay for that fuel and you will probably pay 1.50 minimum for the access to your cash. Or use your debit card, pay 35 cents, get 20 cash back for next time.

Not trying to say what is best for you personally, but I know how all this stuff works, and I'm encouraging all of you to examine what is best for you personally. There is quite a bit of variation if rules and standards and practices coast to coast and company to company. If you know how it all works then you can use or not use the system to YOUR best benefit.

BTW, shell stations don't charge a debit transaction fee...;p

[Cleita]

39. Since I wasn't paying any transaction fee up until then, I don't feel

like paying it now especially since gas went up 35 cents a gallon in the last month. Talk about adding insult to injury. I never got cash back at the service station because I didn't want to go inside the store and wait in line.

I found a trick around the $1.50 ATM charges if you can't get to the bank. Go to the supermarket and buy some stuff you need. Pay with your debit card and get cash back. No fee has ever been charged to me.

[Wildewolfe]

40. That's the same thing I'm talking about though

Gas stations use the same networks the grocery stores do, and some grocery stores DO charge debit transaction fees (trust me, I had to work with that particular network). Some gas stations as well don't. (in fact most that take debit currently, do not charge a transaction fee)

Find the one that fits your particular payment habits and use them. If you use debit look for one that doesn't charge a fee etc...

I will tell you right now though, that expect within a couple years for EVERYONE to be charging that .35 / transaction fee. It will happen. I would be surprised to eventually see it on all electronic tenders either down the road.

[Cleita]

43. Then I will switch back to cash or writing checks.

Most merchants in my area still accept checks. I use my debit card for convenience, but I don't have to.

[Wildewolfe]

44. Again it's a

... valid choice to use checks instead.

You just have to weigh your own personal choices against convenience and fees to see what's right for you in your area and use everything you have intelligently based on circumstances.

Gasoline purchases tend to be only "half planned". That means you know that you will probably have to get fuel on x day of the week. Where you actually purchase that fuel may vary on what you are doing etc.

So if you come to a point that you have to buy fuel and you are going out to dinner and need an extra 20 bucks cash, go inside, use your debit card with cashback and get that 20 bucks without paying the ATM fee. Depending on where you are it may still be quite worth it to spend the 35cent transaction fee.

When you go to make a major purchase, pull out the CREDIT card so you can get the buyer's protections that usually accompany the card's issuer (there are always some additional rights granted by using credit), and then pay off the card with a cash payment that same night to avoid all the interest charges you might get.

Some cards offer discounts on fuel if you use that particular brand of card (like frequent flyer mile cards) so that might be right for you and save you money as well.

It's a wide open market and there are opportunities for you to save money using the cards if you are attentive.

[MadHound]

45. People, people, put the plastic down, and back away slowly.

What is wrong with cash, or check? What, you have to actually go into the store and spend an extra five minutes paying the cashier? Please.

By your use of plastic you are allowing banks and CC companies to dictate your discretionary spending. You are also opening up yourself to fraud and ID theft through the use of these cards. And if you're using a CC, you are having to pay for this abuse on top of everything else. And finally, you are funding the very forces, banks and CC companies that are responsible for so much misery and suffering in this country. Don't like the Bankruptcy Bill? Then why are you still funding the very corporations that rammed it through a corrupt Congress?

It is high time to starve the beast. Cut up your plastic, and be free of these charges, controls and other BS. I've been cash only, and have never, ever had a problem.

If you keep feeding the beast, all you are doing is making it stronger, and giving it ever more sway over your life.

[high density]

47. Fraud and ID theft is also possible with a checking account

And with a checking account, the process of getting money back can be more painful than dealing with fraudlent charges on a credit card. I put gas on a credit card and pay it off every month. Granted the bank is making fee revenue from the merchants on my credit card purchases, but I'm not paying any crazy 21% interest rate or something like that.

[Wildewolfe]

48. There is absolutely nothing wrong with using cash or checks

But, the folks here should be educated on exactly how the processes behind those bits of plastic work, which is what I'm trying to do. The cards are here, and credit/debit systems will never go away at this point. The plastic will get replaced with some biometric identification system someday I suspect, but the processes that drive it will remain.

Using the benefits of that system, while avoiding it's pitfalls is, to me at least, a good thing. When you buy that microwave oven at costco using your Visa card and get buyers protection or an extended warrantee on it without paying extra ... that is good, so long as you pay it off before it charges you interest.

If you truly want to "starve the beast" use your credit cards for everything and make cash payments to them continually to keep you balance zero. They make MOST of their money on interest and fees, and you will be creating work for someone without giving them undue profits...;p

[Kingshakabobo]

55. 75 bucks? That's a bargain for my truck!!

[Ladyhawk]

57. WTF? I usually don't have that much in my account by the end of the month

um...eom