Visa Debit - just how long can they wait?

robatwork

Hi,

I just asked my bank what the rules/law was on just how long a company could wait before presenting a visa debit (ie delta as was) transaction for clearing into my current account. He couldn't answer, but said he knew of cases of a 6 month delay!

Does anyone know the actual law around this?

thanks
Rob

smithja

it is actually 4-5 days, then the bank can bounce the transaction. If the bank bounces it and the company you used the card with knows your address they will write to you and ask you to pay again. James

SparciaM

For a Chip&PIN transaction the retailer has 6 months to take the month from your account and then it is void. It depends on how quickly a retailer does their books. Smaller shops take anything from 3 to 8 days and big stores take 24 hours max.

Just make sure you take the funds off your account in your head so if it does take a long time you have the money there to pay for it. I once did a switch transaction and it took 7 weeks to come out of my account.

With a Chip&PIN/Card transaction the bank CANNOT bounce the payment. As it has been paid by card they HAVE to allow it go through regardless of your account. Reason being is because you agreed to pay the money at time of purchase and agreed under Chip&PIN/Card terms that funds will be in your account when they claim the money. So in the eyes of the bank you've already bought and had the goods, so they will not under any circumstances bounce a card/Chip&PIN transaction.

robatwork

I bet this would be surprising news to some....

thanks

Mikeyorks

SparciaM wrote: »

With a Chip&PIN/Card transaction the bank CANNOT bounce the payment. .

I'd like to see some legislation around that quote?

The Merchant Acquirer, acting for the retailer has, (as in post #2) a short period of around 5 days in which to claim the money. Within that period (virtually all Chip / Pin transactions are authorised ... so called 'floor' levels don't apply) the money is reserved in your account. But if the money isn't claimed - the reserve will drop off after around 7 working days.

Thereafter - the bank will bounce a delayed transaction if there are inadequate funds .... but honour it if funding is adequate, at least up to 6 months.

As it's simply an unclaimed debt (after the authorisation lapses) .... it's claimable up to 6 years

SparciaM

With a Chip&PIN transaction if it takes 24 hours or 6 months, it WILL come out of your bank account. Due to Chip&PIN it cannot be bounced by the bank. You need to contact the retailer and ask them to put it back into your bank account. It's a modern day version of the note 'please pay the bearer the sum of'. As soon as you chip&PIN for something that's it, it will come out of your bank account regardless of funds.

You can dispute a transaction and the bank can investigate and they bank can REFUND the money into your account BUT wont bounce the card payment. ALL card payments go out of a bank account.

I've worked in 4 different banks over the years and have told many customers the same thing. Even if I wanted to bounce the card payment I couldn't do so. Only BACS, SO, DD etc can be bounced. Card payments are payable on demand when the retailer claims the money.

The reserve is an oustanding authorisation and yes can drop off your account, but if you buy food in Tesco's and they take 5 months to take the £35 you spent. It will come out of your account in 5 months time.

Banks have to honour all debit and credit card payments unless fraudulant and then they will still honour it, but refund back into your account. Ask your bank they'll tell you that they wont bounce a card payment, there is no such thing. If banks could bounce debit card payments, then people wouldn't go so far over their limits and be charged, as the bank would just bounce the debit card payment and only charge for an unpaid debit card transaction, but they can't do this. So that's why lots of people go over their limits due to debit card payments.

boo_star

Mikeyorks wrote: »

I'd like to see some legislation around that quote?

The Merchant Acquirer, acting for the retailer has, (as in post #2) a short period of around 5 days in which to claim the money. Within that period (virtually all Chip / Pin transactions are authorised ... so called 'floor' levels don't apply) the money is reserved in your account. But if the money isn't claimed - the reserve will drop off after around 7 working days.

Thereafter - the bank will bounce a delayed transaction if there are inadequate funds .... but honour it if funding is adequate, at least up to 6 months.

As it's simply an unclaimed debt (after the authorisation lapses) .... it's claimable up to 6 years

I'm sorry but you're very wrong.

Authorisatons do only affect your AVAILABLE balance for a short period (around 2-3 working days) but once funds are authorised, the recepient has up to 6 months to claim those funds.

You're also incorrect about floor limits. They DO still apply even with Chip & PIN.

That's right, companies do not need express authorisation from the bank before they can deduct monies from your account as long as YOU authorise it.

And lastly, banks cannot bounce card payments, they're guaranteed to go through.
Thats why every retailer takes them.

smithja

it is actually 4-5 days, then the bank can bounce the transaction. If the bank bounces it and the company you used the card with knows your address they will write to you and ask you to pay again. James If you like I will provide you a link to the Visa Merchant Rules that prove the bank can bounce it, Mikeyorks is perfectly correct too. Chip and Pin is a replacement for a signature to ensure the correct person is using the card it is not a guarantee the payment will be met, if the company does not follow the merchant agreement to which they signed up the bank is perfectly within its rights to return it up paid the same as with cheques that have a guarantee card number on the back but the process was not followed, i.e. they were not banked within a set period. I hope this helps.
Edit: In case SparciaM is making this mistake, it says generally in account terms and conditons that you cannot stop a payment made using your card you have guaranteed it, that is not the same as the bank cannot bounce the payment because the company did not follow their merchant agreement.

Mikeyorks

SparciaM wrote: »

With a Chip&PIN transaction if it takes 24 hours or 6 months, it WILL come out of your bank account. Due to Chip&PIN it cannot be bounced by the bank. You need to contact the retailer and ask them to put it back into your bank account.

That's simply wrong. And once the 'reserved' sum is out of your available balance .... why would you contact the retailer? The unclaimed sum has simply lapsed as an authorised transaction .... albeit it still exists as a 'debt'. If they push the transaction through after the reserved sum has expired (typically 7 working days) - the Bank will bounce it if inadequate funds. Extract from Visa :-

Time limits are set for depositing transactions to ensure timely processing and billing to cardholders. When you hold transactions beyond the period defined in your merchant agreement (usually one to five days), you lose money, affect customer service (cardholders expect to see transactions on their Visa statements within the same or next monthly cycle), and possibly invite a chargeback

SparciaM wrote: »

So that's why lots of people go over their limits due to debit card payments.

As virtually all debit card payments are authorised / transaction sum reserved (otherwise they won't authorise)... and presented within the right timeframe ........... that doesn't hold water either.

fiveyearplan

I am a merchant retailer and although I have never had to use it, if something was wrong with my terminal I have one of those old fashioned machines that I would have to do manually. I have no idea how long that would take to process but much longer than 7 days I'm sure.

Mikeyorks

boo_star wrote: »

Authorisatons do only affect your AVAILABLE balance for a short period (around 2-3 working days) but once funds are authorised, the recepient has up to 6 months to claim those funds..

So - have you never asked yourself why your Bank returns the 'authorised' sum, if unclaimed, to your available balance after about 7 working days??? It's because there is a time limit for claiming under the authorisation! They don't do it for fun. Thereafter they can bounce the transaction if funds unavailable.

boo_star wrote: »

You're also incorrect about floor limits. They DO still apply even with Chip & PIN. .

This is what I said "virtually all Chip / Pin transactions are authorised ... so called 'floor' levels don't apply" ....... a bit loosely worded towards the end but, fairly clear, I think that "virtually" applies to the whole sentence?

If a transaction is authorised - that means any floor level has been passed or ignored? With effect from Chip & Pin floor levels have lost a lot of meaning. As this quote from the APACS site :-

However, with new chip technology payment cards are more intelligent and, even if the transaction is for an amount below the retailer's floor limit, may decide to request authorisation. This enables card issuers a greater opportunity to manage both fraud and debt risk.