Authorized Holds Increased on Fuel Pump Transactions
Authorization hold is the practice of authorizing electronic transactions done with a debit card or credit card and holding this balance as unavailable until the merchant clears the transaction.
Last year, there was a change made in the way gas stations are allowed to hold funds on a consumer’s account when he or she uses a debit or credit card for a purchase. Prior to the change, merchants placed $1 temporarily on hold on a cardholder’s account when the debit or credit card was swiped in order to pre-authorize the transaction. When the purchase was completed, the transaction was processed for the correct amount.
These new regulations now allow the merchant to hold up to $500 on a cardholder’s account, pending the processing of the transaction. They also allow merchants to place that hold whether the consumer selects the "debit" or "credit" option at the pump.
Most merchants still only place the hold on cards that are used as "debit," but they do have the right to place it on "credit" as well.
This hold is placed solely at the discretion of the merchant.
Tyndall has no control over the amount the merchant pre-authorizes and holds. The gas station sends through a specific amount and asks the credit union if the member has that money in his/her account. We respond with an approval if the money is there and a denial if it is not.
The credit union has no way of knowing how much the actual transaction is for until it posts, so we hold the amount that was pre-authorized by the gas station. The hold is released within a maximum of 2 hours. However, to alleviate some of the problems this arbitrary hold may cause our members, we are making every effort to release the hold within about 30 minutes, if at all possible.
What can you do to avoid this situation? Unfortunately, there really is no sure-fire way of avoiding it.
- We recommend you shop around and use merchants you are already familiar with; you may want to check with the employee inside the station, however, to ask how much they will hold before you swipe your card.
- You are still much less likely to have the hold placed when you use your Check Card with the credit option, rather than the debit (do not use your PIN). When the screen prompts you by asking, "Is this a credit card" (or something similar), choose "Yes." In most cases, the gas station will only place $1 on hold to preauthorize the transaction.
- You may also choose to go inside the station and ask the attendant to swipe your card for a specific dollar amount.
Remember, not all gas stations have chosen to hold this higher amount on debit cards. Gas stations are required to have their hold practice information posted at the point of purchase to allow you to make an informed decision.