Pending debit card transaction in apps

ozaz wrote: »

Yes - it seems this does happen - as discussed on Monzo's community
https://community.monzo.com/t/when-pre-authorisation-is-not-pre-authorisation/48119

But it sounds like the issue is the same with any bank. If this happened with traditional banks your 'available balance' (amount available to spend) would also be effected by both transactions until the pre-authorised transaction is removed. Monzo just treats your available balance as your actual balance. The idea being it makes it easier for the customer to stay on top of their money if they just have a single balance and if pending transactions show up as actual transactions. Potential concern with Monzo here is if it causes you to go overdrawn. But they don't charge overdraft fees if overdrawn due to uncleared pending transaction.

Understood and thanks for the steer to the Monzo community. I'm glad to see I wasn't imagining a problem with this processing model and I recall quite clearly discussions back in the 1990s (when I was still in cards) about the difficulties of matching Authorisation Messages to Clearing Messages when the amounts differed.

However, if differing amounts mean a bank 'takes' your funds at both the pending and clearing stages, customers unaware of why that has happened may feel compelled to have a go at the retailer and thence at the bank before they get it sorted. The traditional two-stage method may affect the available balance in the same manner but doesn't carry the risk of overdraft - albeit fee-free - which might impact on your credit history(?).

But the real killer for me is the fact that Monzo now looks to me to be not fully developed or thought out and this makes them look unprofessional. Perhaps they need a few dinosaurs working for them to point out these things before they happen.

I also like the euphemistic way they have marketed their approach as making it easier for customers to manage their money, when the real truth is that it enables Monzo to utilise the value of those transactions before they actually have to surrender the physical cash to the retailer-side of the transaction.

Terry_Towelling wrote: »

The traditional two-stage method may affect the available balance in the same manner but doesn't carry the risk of overdraft - albeit fee-free - which might impact on your credit history(?).

Re potential impact on credit history. I'm not sure, but suspect not. I suspect they use cleared balance behind the scenes and for both overdraft charging and reporting purposes, with available balance for the single balance displayed to customers in the app. But would have to check.

But the real killer for me is the fact that Monzo now looks to me to be not fully developed or thought out and this makes them look unprofessional. Perhaps they need a few dinosaurs working for them to point out these things before they happen.

This probably comes down to personal preference. I would hate it if they went to the 2-stage approach of traditional banks (and in fact would stop using them and switch to a different bank such as Starling or N26 which also eschews the 2-stage approach). It is the instant balance updating coupled with rich transaction information which attracted me to Monzo in the first place, and these are still the most appealing elements for me. Suspect that's similar for a lot of their customers.

I also like the euphemistic way they have marketed their approach as making it easier for customers to manage their money, when the real truth is that it enables Monzo to utilise the value of those transactions before they actually have to surrender the physical cash to the retailer-side of the transaction.

Whether or not they benefit seems speculative to me. Behind the scenes they may well be operating exactly the same as other banks (perhaps regulation dictates this?) and at a superficial level just presenting information to customers in a different way. In fact, you can see which transactions are in reality pending in the background by clicking on a transaction in the app to see further details about it. But in any case, it makes no difference to me if they do benefit. I would rather consider the money spent as soon as I have made a transaction.