Businesses putting holds on credit

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charged
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Businesses putting holds on credit

Postby charged » Thu Sep 22, 2016 3:01 pm

So I just got back from the gas station. I purchased just a only a little more than $13 worth of gas with my American Express BCE. This was the first time I used this card at this gas station. I then see that there is a pending charge of $85 for the gas station. I assume that this is temporary and once it's posted it will be for only the much smaller amount I actually spent.

But are they allowed to do this? Why do they do this? I don't care as long as the posted transaction is the same amount of money I actually spent I was just concerned.


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Re: Businesses putting holds on credit

Postby augiedog » Thu Sep 22, 2016 3:33 pm

It has to do with how the gas pump works with your credit card. In some cases, they do publish the correct amount as a pending charge. Sometimes they say $1. Other times they may charge as much as they expect you to be able to buy. The latter happened in your situation, where they asked your credit card if you can charge as much as $85 worth of gas, and will post the amount you actually dispensed by the time the charge posts (which will be as much as you actually spent).

The behavior could change depending on your card type and how up-to-date the technology your using is. Are they allowed to do this? Yes, it's a standard practice.
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Re: Businesses putting holds on credit

Postby Vattené » Thu Sep 22, 2016 4:00 pm

I'd expect this, too. Definitely watch that it posts correctly, but there's not much you can do until a charge posts anyway.

I've always just seen $1.00 elsewhere, but there's a regional gas station that always authorizes $100.00 when you get gas. I understand why, but I also wonder if this causes them to decline cards and potentially lose business because the cardholder doesn't have $100 available for the temporary authorization (maybe it doesn't do the same with debit cards? no idea). I had the same reaction the first time I got gas there! I've only had one card that lists the actual amount I spent while the charge was pending: my Barclay Sallie Mae. I've never used it at this place for gas to see if it would also show $100.00.
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Re: Businesses putting holds on credit

Postby CarefulBuilder14 » Thu Sep 22, 2016 4:35 pm

I get a separate temporary $1 charge from a local Mobil (along with a charge for the correct amount), and one Circle K put on a single temporary charge of $125.
Last edited by CarefulBuilder14 on Mon Sep 26, 2016 8:01 am, edited 1 time in total.
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Re: Businesses putting holds on credit

Postby Tubpbs » Thu Sep 22, 2016 7:40 pm

charged wrote:So I just got back from the gas station. I purchased just a only a little more than $13 worth of gas with my American Express BCE. This was the first time I used this card at this gas station. I then see that there is a pending charge of $85 for the gas station. I assume that this is temporary and once it's posted it will be for only the much smaller amount I actually spent.

But are they allowed to do this? Why do they do this? I don't care as long as the posted transaction is the same amount of money I actually spent I was just concerned.


The reason they do this is because you are pumping your own gas without an attendant (I assume). When you dip your card, they don't know if you're buying $1 worth of gas of $100. So they ask your bank if you can buy $85 worth before they let you pump the gas. The charge will correct to the actual amount when it posts.
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Re: Businesses putting holds on credit

Postby PhillyPhoto » Mon Sep 26, 2016 7:56 am

charged wrote:Why do they do this?

Gas stations serve something that virtually everybody needs, and can be very expensive. With that, there's a risk of being cheated when it comes to payments. They serve everyone from someone getting gas for their lawn mower, to a big Hummer, and everything in between. There is also different fill up habits. Some fill at a half tank, some run on fumes. So to ensure they won't get stiffed on a hot commodity, they put a hold on your card for the max they think someone could buy ($85 in your case) at one time - to fill an SUV for example. Then when you're done, they only charge what you actually bought. That's why a lot of gas stations had warnings to debit card users that they could have a lot of money put on hold for a few days.
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Re: Businesses putting holds on credit

Postby TXviking » Mon Sep 26, 2016 10:05 pm

The system could have been designed better. For example, it's not hard to envision the ability to query the system in real-time for your available credit limit, and if necessary cut off the gas pump when you reach that amount.

But credit cards were around before the Internet, and POS terminals (once they replaced manual processing) were designed for batch mode operation, not always-on operation. That's changing a bit with smart cards, but even so, the systems are surprisingly antiquated.

Given those limitations, the gas station can't actually query for your credit limit. The best they can do is query for a fixed amount and see if it goes through or not. Some just do $1 (basically just checking if the card is valid); others do $75, $85, $100, $125, whatever.

Another weakness is that while merchants can PLACE holds, they can't release them. Only the issuing bank can do that. So if a gas station sends a $125 hold, then 30 seconds later sends a release, it could be 4 days before your bank decides "OK, they can have their money back now." And not surprisingly, banks with more marginal customers (low credit scores, secured credit cards, or perhaps relegated to debit cards only) tend to be more paranoid and hold your money for longer.

TL;DR: Yes, they can do this...and individual merchants have few tools to fight fraud, so it's almost a business necessity to do this. I hope this post helps explain why.

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Re: Businesses putting holds on credit

Postby thom02099 » Sun Oct 02, 2016 10:08 am

In addition to the above responses, most fuel stations will have a sticker somewhere on the pump, the "fine print", that states that financial institutions/banks may place a limit on the amount of purchase, or place a hold on a specific amount toward the purchase. Some of the fine print will also limit the gallons one pumps, to a max for example of 75 gallons. If one has a motor home or big truck and may exceed that, then one would have to run through twice to fill the tank.

The local station where I fill up most frequently, the sticker says that the maximum hold could be as much as $150. That's a substantial hold, if one is filling a motorcycle tank or a 5 gallon gas can for the snow blower. Doesn't mean they WILL hold that much, just that they can.
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