Pre-Authorised Transactions

innovate

Thanks, savagej, your response has clarified things quite a bit. I agree, the invention of the terms "online" and "offline" probably just adds confusion rather than clarification.

It's late at night, so that might be the reason why it escapes me why I need to know about the exact workings of debit card transactions.

I used to think it's good enough to just keep a record of what I actually spent on debit cards (vs what I have in the bank). Similar for credit cards and my credit limits. This has served me alright for the best part of 3 decades.

May be I always had "off-line" cards and just didn't know it, lol?

JuicyJesus

MoneySaverLog wrote: »

That's interesting as I thought when you pay at the pump they use offline transaction. When I check my balance online with lloyds tsb, where I have a offline card, £1 is pre-authorised at ASDA.

Right. You may have to bear with me, since I don't drive, so I have never used pay at pump. A lot of this is a guess.

They authorise £1 because, before you've pumped the petrol, they don't know how much to charge you. But they need to check the card is valid before they dispense any fuel to you. So they authorise £1, and if that goes through they can assume the card is valid, and send the transaction for the right amount off for settlement when you're done. As far as they're concerned, it isn't their problem if you haven't got the funds, because they will still get paid. So they do use offline transactions, but they authorise to check the card is valid first.

EDIT: savagej got there first. That'll teach me not to read stuff.

innovate wrote: »

I used to think it's good enough to just keep a record of what I actually spent on debit cards (vs what I have in the bank). Similar for credit cards and my credit limits. This has served me alright for the best part of 3 decades.

May be I always had "off-line" cards and just didn't know it, lol?

That's not just "good enough", it's what you're supposed to do.

If you've had bank accounts for 30 years without any major credit problems, internal (e.g. returns, overlimit positions) or external, then you'll probably have an offline card. If you have a contactless card, you definitely do.

innovate wrote: »

At a guess, they work a bit like cheque guarantee cards (if you are old enough to remember them). I.e. there is a maximum amount the bank guarantees to pay the merchant, independent of the actual purchase amount. The merchant would normally have the customer's signature for the transaction, and the remittance process from the bank to the merchant probably follows some ancient processes which still survive from the pre- chip and PIN era.

Basically, each merchant has a "floor limit", below which they won't bother sending a transaction off for authorisation. Usually this is quite small - perhaps £5 or £10. Over that limit, all transactions will be authorised online. Under that limit, they might not be. It saves money for the retailer.

If the card is a full-auth/online one however, each and every transaction will be authorised.

Gromitt

samwsmith1 wrote: »

I'm guessing as innovate says they have a limit, for example I can only put a max of £99 in with pay@pump

I visit Pay@pump several times a week, and the message "Begin fueling, max spend £xx" seems to differ each time. Some times its £60, others £70, others £99. I've no idea why. I always thought that was the auth amount, and then the actual amount was presented when you hang up the pump. Seemingly not, but I've no idea why they would change the max value in that case (even if its the exact same station and pump)

MoneySaverLog

Gromitt wrote: »

I visit Pay@pump several times a week, and the message "Begin fueling, max spend £xx" seems to differ each time. Some times its £60, others £70, others £99. I've no idea why. I always thought that was the auth amount, and then the actual amount was presented when you hang up the pump. Seemingly not, but I've no idea why they would change the max value in that case (even if its the exact same station and pump)

It always comes up as maximum spend £99, with £1 earmarked straight away with me, the full payment leaves my bank a few days later. I always use the same ASDA for petrol as it's the cheapest round my end.

samwsmith1

MoneySaverLog wrote: »

It always comes up as maximum spend £99, with £1 earmarked straight away with me, the full payment leaves my bank a few days later. I always use the same ASDA for petrol as it's the cheapest round my end.

Same with me except I always use Tesco here in York as ASDA's the wrong side of town.

Plxply

savagej wrote: »

Innovate, I pointed out sometime ago it was a made up terms, made up by people on this site to help people understand the difference between card types. But, in my opinion all it has done is lead to more confusion. In addition the same person who thought it up has added to the Wiki entry for Visa Debit, and it has no bearing on reality.

I like the idea of Visa Debit however I do agree that it should be more clear to the consumer whether the card is offline or online auth, as the only way to truly check is to either read the magnetic stripe or the chip or hope someone has uploaded information on the BIN. Even adding "Online" below the Visa Debit logo would certainly clear up a lot of confusion.

savagej

innovate, wrote why do I need to know and could not think straight as it was late at night but came to the correct conclusion that all cards were previously "off-line", unless it was an Electron or SOLO card so you knew your card would work practically anywhere.

Now you can have two identical cards on the outside and no idea what is going to happen when they get run through a card EFTPoS terminal, if the card is now "on-line" it might not work where it did before and many people could end up embarrassed as they have or think they have a valid payment method when they walk through the door as their is the sign, but when the card is put through even although you could have 10x that amount it still gets declined.

This on-line/off-line things only applies to debit cards as well and all prepaid cards are "supposed" to be on-line, it does not apply to credit cards which are always off-line.

The credit card part always works, but the debit card part does not and mistakes get made depending on the card, the terminal, the amount, the calculated fraud score which could be based on location, last use of card and what for, what you trying to buy like razor blades or whisky will give a higher score, and so on.

It no longer comes down to is there enough money in the bank account attached to this card, but also to, is this the real card holder using it to buy things they want or have they suddenly decided to buy things they (the real cardholder) could sell on, and this can cause a decline without it triggering a phone call to see if it is you. As you can see this complicates matters somewhat.

MoneySaverLog

So better to use a credit card (not prepaid) rather than a debit card then

innovate

Plxply wrote: »

Even adding "Online" below the Visa Debit logo would certainly clear up a lot of confusion.

OK, with some cards you cannot make any payments unless the bank has authorised the full amount. In MSE Forum parlance, that would be an 'online' card.

However, you could have - again, in MSE parlance - an offline card, and still not be able to make any payment without full pre-authorisation because the purchase price exceeds the merchant's floor limit. So what would be the point of knowing you have an offline card?

I completely fail to see how the introduction of any 'online' or 'offline' classification would add any real value to anyone. What would be the point of it? People who spend money on their card and then think they haven't spent it just because the money doesn't come off their bank account within x hours are just simply kidding themselves, or are disorganised. The word 'online' on their debit card wouldn't change that.

Instead, people should just simply stick to not wanting to buy anything if they don't have the money in the bank, or an arranged overdraft that covers the expenditure. The basic principle of paying by debit card shouldn't be any different to paying with cash - you couldn't buy anything with cash if your wallet is empty, or if nobody lends you some cash.

What might help people in managing their finances is if the POS terminal, or the Internet transaction, showed something like:

• £x available in your account after this transaction. Continue Y/N? or
• we have been unable to check your account balance. Continue Y/N?
• we have been unable to authorise this payment. Please contact us on 0800-xxxxxx for further information

EDIT: having just seen another post from savagej, authorisation even on those "online" cards is a bit more involved than simply checking the balance. Which makes me even more convinced that classifying a card as 'online' or 'offline' adds no real value.

pqrdef

Plxply wrote: »

Even adding "Online" below the Visa Debit logo would certainly clear up a lot of confusion.

They tried that. They put "Electron" on the card, signifying "Electronic use only". It wasn't very popular.