We have encountered some gas stations obtaining authorization for a purchase amount of $1. When the actual debit comes in it for a much larger amount, usually $40 - $50. This sometimes creates an overdraft. Is there anything we can do to avoid having to pay amounts more than what was authorized?

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Join the club. I believe all banks are in the same boat and we're at the mercy of Mastercard/Visa and the merchants. Hopefully something gets done about this sooner rather than later.

Can your processor identify those authorization requests and assign some reasonable higher amount to them -- say $40 to $60? And authorize based on the inflated amount?

The $1 auth is good for up to $75. If the amount posted is greater than $75 you do have the ability to chargeback the difference of the posted amount and $75. This is all part of the Debit card game, as you most likely have run into similar issues for car rentals and hotel stays.

Visa/MC came out with a real time option last year, similiar to PIN posting of trans, when gas prices were $4.00+ and the OD occurred a lot when it cost $150 to fill a truck, but the process did not work real well from the merchant side and I do believe many gas stations use the functionality even though the issuer was required to be able to have it available.

Some stations will auth a higher amount, but this is completely merchant driven.

This is an area of risk with the Reg E changes of not charging a fee when they don't opt in, but cannot deny the tran as they had $2 in their account at time of auth. maybe this will drive some changes and require going back to real time auth at the pump for actual amount.

Looking forward, I think the only real progress will be made when banks, who are taking the risk of forced overdrafts when they don't get paid, push the card system operators (you know who you are!) to make fundamental changes in the way debit (and credit) card transactions are processed. The two-day or longer delay in posting transactions is a relic of the old paper ("knuckle-buster") sales draft process that required actual paper deposit of drafts. Authorization was handled by telephone and settlement resulted from processing paper. The authorization step has been converted almost entirely to electronics with the widespread use of electronic terminals, and paper drafts have (largely) gone the way of the dinosaur, but the batch-processing delay is still built into the system. MasterCard and Visa could eliminate a lot of the delays if they would upgrade their infrastructure so that once the sale is finalized (with a signature or a PIN) the transaction is transmitted back to the card issuer for posting (as it is in the ATM/PIN-debit world already).