Pending card transactions

jaybeetoo

Why are pending card transactions instantly taken from your account but can take 7 - 28 days to be credited back to your account?

I have a pending transaction that the merchant has told me was released but yet I’m having to chase my bank to get it back.  I have no idea where in the chain the hold up is.  They are quick to take your money but slow to pay it back.

It doesn’t appear to be a fair, equitable and transparent system.

It is about time pending card transactions were properly regulated to stop consumers being ripped off.

p00hsticks

jaybeetoo said:

Why are pending card transactions instantly taken from your account

I think that's because that's what the majority of people these days seem to want. If they make a purchase they want to see it gone from their bank account straight away, rather than it disappearing in several days time when the full payment details work their way through the system. Most people now expect their bank balance to show all the purchases they have made straight away, rather than wait the few days it normally takes for it to fully work through the card processing system.

For background (I used to work in the card processing industry).....

When you make a purchase at a retailer, they'll usually ask for an authorisation from your bank - this will confirm that e.g. the card's not lost or stolen, and that you have the money in the bank to pay for it.  The bank can decline the transaction at this stage, but if it's happy for it to go ahead then, given a 'heads up' that the transaction is taking place, the bank will flag it as a pending transaction and - at least sometimes - deduct the amount from your available balance (I'm not sure if this is now compulsory or up to the individual bank to decide how to handle.

jaybeetoo said:

 can take 7 - 28 days to be credited back to your account?

Unless it's changed since my day (and I very much doubt it, as the card processing system is global, highly regulated, highly complex and therefore works on the general principle of 'if it ain't broke, don't try to fix it') the authorisation part of the process - and sometimes the initial data gather - is the only bit that's in real time. The rest of it tends to happen in overnight 'batch' processing (still mimicing the days when data had to be physically transported via magnetic tape).

The merchant sends the details of all the transactions to a 'merchant acquirer' who they pay to deal with their card processing. The acquirer then processes all the transactions and passes them to the appropriate card issuer (Mastercard, Visa, Amex etc). These then in turn process the data and pass the details onto the relevant issuing banks. The whole process usually takes a day or two but can take longer if, for example, the acquirer has a problem getting the information from the merchants tills or the data is rejected or corrupted somewhere along the way.

Once the details reach the bank, then if they match what was contained in the original auth, the bank will drop the 'pending' transaction and deduct the funds from your actual balance and the transaction is complete. 

In the meantime, corresponding 'money' payments are flowing the other way ;

issuing bank -> card company -> merchant acquirer -> merchant retailer 
   

jaybeetoo said:

I have a pending transaction that the merchant has told me was released but yet I’m having to chase my bank to get it back.  I have no idea where in the chain the hold up is.  They are quick to take your money but slow to pay it back.

Actual refunds (where the payment has gone all the way through the system and the merchant puts though a refund transaction on their till) follow the same path and so will usually take a few days to work through the system.

The problem you describe is where for some reason the initial payment hasn't been processed successfully all the way through. There are three main casues for this.

The first is that the bank refuses to authorise the transaction  - perhaps because the card is reported as lost, or because the amount would take them beyond the holders credit or overdraft limit.  This only causes embarrassment and frustration to the cardholder, as in this case the bank declines the authorisation and neither the retailer nor the bank take any further action on the potential transaction.

The other two, however, are more problematical. One is more common for online transactions. Whilst, as part of the authorisation process, the bank will relay back to the merchant information about whether the billing address given to the retailer matches that held by the bank, the bank doesn't see this in itself as a reason for refusing the transaction. If the retailer, however, on receiving this info, isn't prepared to go ahead (some understandably won't want to deliver high value items to addresses other than that associated with the card, as if the transaction is fraudulent then in such cases it can be the retailer rather than the bank or card company that bears the cost)  then the retailer can decline the transaction themselves. In such cases, then usually what happens is that  the bank, unaware that the retailer has declined the sale their end, keeps the transation as 'pending'. It's only when it doesn't receive a matching payment record from the card company after a specified amount of time - usually around 14 days - that it will decide the payment didn't take place for some reason and release the 'pending' funds back to your available balance.

The third reason is where, when the payment details reach the bank, for some reason they don't full match what was on the oroginal authorisation. I know this sometimes causes (used to cause ?) problems when doing online shopping, when authorisation was given originally for one amount but the eventual bill came to something different when the shopping was picked due to stock availability, price changes etc. In such cases the bank actions the eventual payment received, but becasue the authorisation doesn't fully match, the 'pending' transaction isn't linked to it and so stays on the system until, after no matching payment is received , the banks drop it and restore the funds to your available balance.

jaybeetoo said:

It doesn’t appear to be a fair, equitable and transparent system.

It is about time pending card transactions were properly regulated to stop consumers being ripped off.

The one bit in the process I'm not sure about, and which I think would help to resolve your problem if the solution was developed and/or more widely known - is if and how a pending transaction that has occured as the result of an authorisation for a payment that is not going to actually happen can be released early and who would be responsible for doing this.

It isn't the same as processing a refund, so I don't believe it would be something that shop staff could do. There is a code associated with the specific authorisation (it should show on your receipt if the transction got past being declined by the retailer) and I beleive that theoretically this and the card details would enable someone either in the retailers head office, at the merchant acquirer or the issuing bank) to get in and somehow 'release' the authorisation. The most probable contender for this task would, I think,  be the bank as it's their system that set up the 'pending transaction' in the first place, and the bank system is perfectly capable of processing any actual payment transaction that might come throguh at a later date even thoguh the auth had disappeared.   

The issue is that when it happens none of the interested parties other than the consumer would really have any vested interest in doing the work - it's much easier for them to simply say that they should wait the fourteen days or so that it takes for the unmatched authorisation to drop off automatically, or to pass the buck to one of the other organisations involved to actually do it.

Apologies if I've waffled on there and/or it's something you already knew, but I think it's useful to understand why the problem occurs.

simax

You can get quicker Visa card refunds from certain places now. I’ve noticed that payments back to my Visa Debit card from the National Lottery (on the rare occasion I win anything 🤣) only take a couple of minutes to hit my account.

Visa Fast Funds it’s called:

https://www.visa.co.uk/supporting-info/visa-direct/visa-direct-overview-fast-funds.html

TadleyBaggie

Because the authorisation is in real time, the actual transaction is often batched up and done overnight.

longjohnjohnson

TadleyBaggie said:

Because the authorisation is in real time, the actual transaction is often batched up and done overnight.

Not quite, as it's rare a cancellation results in an overnight release on the funds.

The answer is because these companies simply can't be bothered, and won't until people make a big enough fuss to make doing something more worthwhile than doing nothing.

Properly cancelling a transaction is possible, but almost nobody has the ability to do this or even the knowledge that it is possible.  Until that changes, through customers costing companies money by refusing to accept the status quo, it will remain so.

Ergates

longjohnjohnson said:

TadleyBaggie said:

Because the authorisation is in real time, the actual transaction is often batched up and done overnight.

Not quite, as it's rare a cancellation results in an overnight release on the funds.

The answer is because these companies simply can't be bothered, and won't until people make a big enough fuss to make doing something more worthwhile than doing nothing.

Properly cancelling a transaction is possible, but almost nobody has the ability to do this or even the knowledge that it is possible.  Until that changes, through customers costing companies money by refusing to accept the status quo, it will remain so.

This isn't about cancellations though.

Speedbird676

jaybeetoo said:

Why are pending card transactions instantly taken from your account but can take 7 - 28 days to be credited back to your account?

I've never had a pending transaction remain on my account more than about 7 days. Even where it's been something like a car hire deposit and the hire period goes beyond that, the pending transaction has dropped before I returned the car.

A couple of real world examples:

p00hsticks said:
The third reason is where, when the payment details reach the bank, for some reason they don't full match what was on the oroginal authorisation. I know this sometimes causes (used to cause ?) problems when doing online shopping, when authorisation was given originally for one amount but the eventual bill came to something different when the shopping was picked due to stock availability, price changes etc. In such cases the bank actions the eventual payment received, but becasue the authorisation doesn't fully match, the 'pending' transaction isn't linked to it and so stays on the system until, after no matching payment is received , the banks drop it and restore the funds to your available balance.

I get this sometimes with airline bookings. The website requests an authorisation for the total amount at the time of purchase, however, a booking for two people will be processed as two separate transactions when it is ticketed. The two individual transactions will total the original authorisation, but because they don't exactly match the pending transaction also remains for a few days until it drops off.

p00hsticks said:

The one bit in the process I'm not sure about, and which I think would help to resolve your problem if the solution was developed and/or more widely known - is if and how a pending transaction that has occured as the result of an authorisation for a payment that is not going to actually happen can be released early and who would be responsible for doing this.

It isn't the same as processing a refund, so I don't believe it would be something that shop staff could do. There is a code associated with the specific authorisation (it should show on your receipt if the transction got past being declined by the retailer) and I beleive that theoretically this and the card details would enable someone either in the retailers head office, at the merchant acquirer or the issuing bank) to get in and somehow 'release' the authorisation. The most probable contender for this task would, I think,  be the bank as it's their system that set up the 'pending transaction' in the first place, and the bank system is perfectly capable of processing any actual payment transaction that might come throguh at a later date even thoguh the auth had disappeared.

I recently used a card as a deposit when checking into a hotel. They took a "pre-authorisation" for £100 which appeared on my account as a pending transaction. At check out I decided to use a different card, so the staff member used the POS machine to void the pre-authorisation transaction. In reality, I don't think the pending transaction dropped any quicker from my account than if they'd just left it to drop of its own accord.

TadleyBaggie

longjohnjohnson said:

TadleyBaggie said:

Because the authorisation is in real time, the actual transaction is often batched up and done overnight.

Not quite, as it's rare a cancellation results in an overnight release on the funds.

That's how worked with Post Office transactions, I worked on the backend systems.

Bigwheels1111

Amazon put funds on hold before dispatch.
They dispatched my items and then re billed me.
So I had 2 charges on my Chase account.
The first one took 19 day and several phone calls to both companies.
£25 in good will gestures from both in total.