- Centurion Member
- Posts: 264
- Joined: Fri Apr 15, 2016 5:46 pm
- Location: Palm Beach, Florida
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.