Lightning fast debit card payment - just curious

BlondBoy

Hi all - no problem here, just curious.

Ordered a new computer (hooray!) and my debit card was authorised for the amount. All fine - the cost of the computer was deducted from my available balance.

However, they didn't actually bill me until the machine was shipped, by which time the pre-authorisation had dropped off - the money for the computer was back in my available balance.

Then, last night, the payment was taken and there it is on my statement already, without that 2-3 day delay for the details of the transaction to come through like a normal debit card transaction.

Like I say, all in order and but just curious as to the process that made this happen. Does the preauthorisation hang around longer than it shows on the available balance? And, theoretically, if I hadn't still got the money in the account, would the payment have bounced? Or is it guaranteed in some way that would have meant being horribly overdrawn if I had got my maths wrong?

Thanks


Chris

Mikeyorks

BlondBoy wrote: »

Like I say, all in order and but just curious as to the process that made this happen. Does the preauthorisation hang around longer than it shows on the available balance?

Bit unusual they would authorise it - and then not take it. If their policy is to take the money at the delivery point - they would normally authorise at that juncture .... for their safety, not yours. The authorisation only lasts (around 7 working days where the debit never arrives with your bank - and the authorisation is 'orphaned') until you see the reserved funds added back. Which is done by your bank - when the request for the funds doesn't materialise.

BlondBoy wrote: »

And, theoretically, if I hadn't still got the money in the account, would the payment have bounced? Or is it guaranteed in some way that would have meant being horribly overdrawn if I had got my maths wrong?

Yes it would have bounced - no guarantee where they had allowed the authorisation to lapse .... which is why I said it's a bit strange to do it that way. You must sound trustworthy!

Hope it's a company you fully trust? Personally I'd always do such a transaction on a Credit Card - to give me a bit more protection. Made the awful mistake of ordering from Tiny computers a few years ago - they took the money immediately. And I'd actually fully paid my resultant CC bill - before they started arguing they hadn't been paid, and wouldn't ship. Asked my CC supplier (Halifax) to confirm to them the transaction data - and they declined, saying it was a waste of time with that Co, and simply refunded my money in full. One of the few companies I've been pleased to see go into liquidation a few months later - as it started to save others the hassle I'd been unaware was a feature of Tiny for some time.

realaledrinker

Bought the missus some jewellry last night at 4.50pm on my debit card so as to get a good discount.

Showed up in my bank account this morning!

Was hoping for a couple of extra days' credit.

gulife

This used to happen with me and the old American Express Travellers Cheque Card. I could preload the card with say, £500, and it would authorise in 24 hours, and then drop off my available funds. The next day, my available funds would be back to +£500 and it would be another 2 working days until the AMEX charge came onto my debit transactions.

Again, haven't a clue why...

BlondBoy

Mike

Thanks for that. Yeah, do trust the company, for better or worse - it's Apple, and I've never had a problem with them.

I ordered on Nov 13, and the funds were deducted from the available balance straight away. As I wanted a custom configuration, it went into the production line queue and the machine was shipped from manufacturing in Shanghai on Friday (23rd).

The money went back onto my available balance on or around the 20th - exactly as you say. What surprised me though was that last night, it was still on the available balance, but this morning not only was it gone from the available balance but it was on the statement, dated today, Apple Computer Inc. Not a problem at all, as I say, but a little curious as to how it worked, because, as you say, it's a bit risky for them to ship the goods without the money in hand. I've bought from them before (too much than is good for my balance!) so maybe they view me as a good customer. Quite odd, though, no?

Thanks for your insight though - appreciated.


Chris

[Deleted User]

What happens is when the payment is first authorised, the issuer gives an authorisation code for that transaction, this can then be processed anytime for up to six years and the payment will be gaurenteed by the issuer to the retailer.

It's very rare it goes at all up to the six years, but I have seen it from working in banks. It all stems from when transactions were still processed on paper vouchers.

bengal-stripe

be_alright wrote: »

What happens is when the payment is first authorised, the issuer gives an authorisation code for that transaction, this can then be processed anytime for up to six years and the payment will be gaurenteed by the issuer to the retailer.

I think it’s the same principle as hotels use with pre-authorisation. You arrive, they get authorisation for your stay as well as expected extras in bar and restaurant. That sum comes out of your ‘available balance’. But as the actual charge is not dispatched, until you actually book out of the hotel, it will fall off after a few days.

Nevertheless, should you make a runner or pinch the towels by the dozen, they can still put an additional charge through at some later date. That charge will get paid as long as it does not exceed the pre-authorised sum. That’s the reason why many hotels are very ‘generous’ in the pre-authorisation department, just to cover their backs.

Mikeyorks

be_alright wrote: »

What happens is when the payment is first authorised, the issuer gives an authorisation code for that transaction, this can then be processed anytime for up to six years and the payment will be gaurenteed by the issuer to the retailer.

When it's authorised (because it's above the floor level for the retailer) - the money is reserved by your card supplier. And there is a requirement that the Merchant acquirer acting for the retailer - requests the money within 3 working days. That's why the money is 'un-reserved' - if the request doesn't materialise within about 7 working days.

Once the money is added back to your available balance - the authorisation has effectively lapsed as the money is no longer ring fenced. I'm sure they can use the code for a longer period - but the authorisation is no longer effective.

Dickieburd

What would happen if say someone was to turn up at a hotel such as Travelodge without a booking and the place required a credit/debit card for registration. Now if that person did not have a credit card but had a debit card with say £10 on it and the room was say £50 and they paid £50 cash on arrival and gave them the debit card which the account has no overdraft, would any funds be reserved or if the account had say even £60 in it would the hotel still reserve £50 from the debit card leaving the account with £10 credit to use even though they had been paid by cash?

BlondBoy

Thanks to all - made it a lot clearer for me and satisfied my nosiness!


Chris