Debit card funds held in "reserve"

ambahall

This may help anyone travelling in France by car. Or anywhere else I guess although France seems to be the main culprit.
This happened to a friend last weekend. She visited a petrol station (part of supermarket chain) in France on Sunday afternoon when no staff present. They have automated machines for dispensing fuel. You put in your debit or credit card and enter your PIN. The machine tells you how much fuel you can buy (in this case up to 500 or so Euros). You then fill up, end the process and receive a receipt for the amount you have bought and that is what is debited from your card. End of transaction.
In my friend's case she put in her UK debit card (Smile account) and PIN and then realised she was holding the diesel pump so she just put the pump back. This ended the transaction and spat out her card so she picked up the correct pump and started again. This time the machine said she had no available funds. Thinking this was just a computer glitch she used a different card and bought 30 Euros of fuel.
Yesterday her mortgage was "bounced" as there were no funds available in her account - according to the bank.
I did a bit of digging and found something rather worrying. In this sort of case (rather than a machine where you ask for a specific amount of "credit" for fuel) the "system" actually reserves the entire content of your bank account (if a debit card - I don't know about credit cards) until you end the purchase process. At that point the amount purchased is debited from your card and the "reserve" is cancelled. But if you never complete the purchase - as in my friend's case - then the reserve stays on your account for X days (who knows how many - the bank certainly don't!). Within that time you can't draw cash, pay for anything in a shop or online and, most importantly, any standing orders or direct debits will be returned - with "appropriate" charges, of course, by both the bank and the other side when they don't get their money. There seems to be no way to remove this "reserve" so you suffer and pay charges or borrow until the bank sees fit to let you have access to your funds again!

In the same vein, I had huge problems with airline tickets bought via a travel agent. It wasn't the travel agent's fault but when they processed my card for air travel the amount was "reserved" on my debit card but was not "unreserved" when the charge appeared on my account. So for a few days (again, unspecified) I had more or less paid twice. I never actually paid twice, of course, but for those days I couldn't use my money so it came to the same thing. And the bank could do nothing, cared nothing, didn't understand the problem and, on one occasion, just put the phone down on me when I got rather stroppy about it. They were quite convinced I had bought two tickets, not one, and the second "charge" had just not arrived yet. I fail to understand why a "reserve" doesn't carry some sort of computer "code" which matches the charge so when the account is debited the reserve is automatically removed. And, in the case of my friend, there should be some sort of fail safe to cope with voided transactions where no purchase has actually taken place which removes the reserve.
At the very least, the banks MUST be able to tell you exactly how long that reserve will stay on your account so you can make arrangements appropriately but in my experience they are terribly vague about it.

So the moral here, I suppose, is if buying from an automatic petrol pump DON'T abort the transaction. Spill a few drops on the floor (petrol and tears) and all will be well!!

And the banks must come and meet us in the 21st century about these "reserves". Now paper debits are almost a thing of the past there must be a much shorter time for a "reserve" to stay on an account waiting for the charge to arrive. 24 hours would seem reasonable with electronic transactions. And some sort of "tag" to match a reserve and a charge. Any banks out there like to comment?

dzug1

But the banks don't know when the retailer is going to balance and finalise his accounts

But yes the system needs improving.

ambahall

I realise that - some bank by the hour, some by the day. Small traders maybe less often. But maybe the banks should be more forceful about the time allowed to complete the charge. There can't be many traders out there who still do paper debits for cards and the automatic systems go through every day. So why does the reserve still seem to be set at "around 5 days" - that's history. And certainly once the charge arrives the corresponding reserve should be cancelled - surely the blasted computers can cope with that at least!

jonesMUFCforever

Why not use a credit card?
This situation comes up time after time.

dalesrider

I did a bit of digging and found something rather worrying. In this sort of case (rather than a machine where you ask for a specific amount of "credit" for fuel) the "system" actually reserves the entire content of your bank account

Sadly you are off the mark a bit. Well a lot in the case of the amount reserved.
On the petrol debits.
In the UK [EMAIL="pay@pump"]pay@pump[/EMAIL] auth for £1 or other small amount and then debit for the full amount.
In Europe they auth for the FULL amount you can take 120 euro I think and then debit for the correct amount. Now because this is a international payment and there is a diffrence in the amounts. It is easy for the auth to still sit there till it drops off (upto 14 days) There is also the issue of oversea's banks taking longer to process transactions.

Many people are not aware of how oversea's pumps work. It causes a lot of issues with people who run accounts close to their limits and travel accross europe in a short space of time.
Even had people stop their cards confirming fraud. Stateing they had not taken as much as was quoted...

I had huge problems with airline tickets bought via a travel agent. It wasn't the travel agent's fault but when they processed my card for air travel the amount was "reserved" on my debit card but was not "unreserved" when the charge appeared on my account. So for a few days (again, unspecified) I had more or less paid twice. I never actually paid twice, of course, but for those days I couldn't use my money so it came to the same thing. And the bank could do nothing, cared nothing, didn't understand the problem and, on one occasion, just put the phone down on me when I got rather stroppy about it. They were quite convinced I had bought two tickets, not one, and the second "charge" had just not arrived yet. I fail to understand why a "reserve" doesn't carry some sort of computer "code" which matches the charge so when the account is debited the reserve is automatically removed

Auth code should match. Unless retailer had processed the transaction twice (not uncommon) and then blame the bank.....
But the only people who can remove a outstanding auth are the retailer by contacting their authorisation center and asking them.
Banks cannot remove a outstanding auth.... If they could retailer would stop taking card payments.

The problem here is not the banks. It is the card processers.
A auth sits there because a retailer has not fully requested the funds. If the auth sits there after the transaction has debited then the issue is with how their auth center has processed the transaction.

Look at it like this.
Banks do not give a retailer your money.
The retailer takes it from the bank.

ambahall

Thanks Dalesrider. I do understand about the banks not being really the culprit here but where else can a victim turn? As individuals we can't contact the card processors. Actually those air tickets were issued by myself - I am a travel agent and was using our parent Company booking system so I know there was no double debit. I was the only person who knew anything about it.

In the case of my friend, whatever the normal procedure is for a "reserve" at a French pump it definitely was not the case here. My friend had 500 Euros available in her account at the start of the aborted transaction and zero available when she tried for the second time. She called her bank and they confirmed that 500 Euros was being held on reserve. She made no other purchases - she knew her mortgage was due to be paid the following day. She was not running her account close to the limit - she had allowed enough to pay her mortgage plus petrol plus leave 100 Euros in the account - that's not running close. And my friend actually lives temporarily in France and this was her local petrol station so she was not travelling across Europe. Regrettably, the official or correct procedure for reserving only 120 Euros or whatever did NOT apply in this case.

I think JonesMUFCforever is probably right. The solution is to use a credit card - if you have one - but not everybody likes them and my friend is one of those people who does not

redux

I've found some other odd features or even an actual problem with this system

One large retailer takes a pre-authorised transaction, which may be 100 or even 130 euros, and actually charges for this.

Then the next morning a correction refund of the difference appears in the account.

A different retailer does the pre-authorisation, then fully cancels it simultaneously with the real amount being charged for the actual delivery, which is fine.

Unfortunately one in the first category has not yet done the refund the next day, so until the debit card and retailer can sort this out I've been overcharged by a factor of more than treble.

Subsequent to that, pumps at two retailers immediately rejected up to 5 British debit and credit cards, without even testing PIN or authorisation.

dalesrider

redux wrote: »

Subsequent to that, pumps at two retailers immediately rejected up to 5 British debit and credit cards, without even testing PIN or authorisation.

So if you had not entered the PIN.
Either the retailer did not take that brand of card or there was a issue with the pumps at the time not taking any cards.

redux

dalesrider wrote: »

So if you had not entered the PIN.
Either the retailer did not take that brand of card or there was a issue with the pumps at the time not taking any cards.

This was about five different brands of debit and credit card held by two customers.

Several local people had used 3 adjacent pumps at one station in the previous few minutes. Other pumps were in use at the second place that made multiple rejections.

dalesrider

Going to be a link issue then.
Visa & MasterCard are the same all over the world.