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#295220 - 12/29/04 09:05 PM PIN Based Processing Problem
DDB Offline
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DDB
Joined: Oct 2003
Posts: 170
Do we have a regulatory problem or a contractual issue with the following situation, or is it just poor (but allowable) customer service?

When customers use a debit card for a PIN-based transaction at a gas station, the merchant preauthorizes the transaction for a set amount, such as $75. This reduces the available balance on the customer's account by $75. Once the customer pumps the gas, the merhant issues a second preauthorization for the amount of the purchase. According to network rules, this second preauthorization is supposed to replace the first one, but our computer system doesn't reverse out the first one until the day's transactions are processed overnight. If the transaction is conducted at the gas station after the bank's 3 pm cutoff time the $75 preauthorization isn't reversed out until the second night.

Other than making some customers angry, what is the impact of this problem? Are we violating any regulations? Also, what is the impact of breaking the network rules?
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Operations Compliance
#295221 - 12/29/04 09:29 PM Re: PIN Based Processing Problem
IndyGirl Offline
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Joined: Jun 2004
Posts: 11
We had a similar issues, and instructed our card processor to replace the $75 preauth amount with a $1 preauth amount. As far as I know, we aren't violating anything.

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#295222 - 12/30/04 02:41 PM Re: PIN Based Processing Problem
DDB Offline
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DDB
Joined: Oct 2003
Posts: 170
Our debit card department contacted the card processor and the network earlier, but they both said the problem lies in our own internal loan operating system. Are you saying that you requested the card processor to do something so that the original preauthorization can still be set up for whatever the amount the merchant wants (such as $75) but is immediately dropped to $1 once the customer purchases the gasoline?

Thanks
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Any statements or opinions are mine, not necessarily my employer's.

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#295223 - 01/04/05 05:23 PM Re: PIN Based Processing Problem
DDB Offline
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DDB
Joined: Oct 2003
Posts: 170
What about anyone else? Are we violating any regulation by having both preauthorizations stay on the account? Does anyone know the impact of violating the network rules which say that the original $75 preauthorization should be removed once the actual transaction is conducted? Thank you.
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Any statements or opinions are mine, not necessarily my employer's.

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#295224 - 01/04/05 07:19 PM Re: PIN Based Processing Problem
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 80,325
Galveston, TX
It depends - do you reduce their available balance by that amount? Are you bouncing checks because of it or just blocking future debit card authorizations?
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#295225 - 01/06/05 09:53 PM Re: PIN Based Processing Problem
DDB Offline
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DDB
Joined: Oct 2003
Posts: 170
The checks clear based on ledger balance, not available balance. So they're not affected. But it will deny debit card transactions if the debit amount exceeds the available balance.
_________________________
Any statements or opinions are mine, not necessarily my employer's.

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#295226 - 09/08/05 03:12 PM Re: PIN Based Processing Problem
Angel Eyes Offline
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Angel Eyes
Joined: May 2001
Posts: 4,599
Wanted to follow up on this a bit. Because of upset customers, we are debating reducing the $75 gas station preauthorization amount to $1. Just wondering what other's are doing....according to our customers we are the only ones that still have the $75 preauthorization and we are being very unfair! Gotta love those customers

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#295227 - 09/29/05 07:53 PM Re: PIN Based Processing Problem
Angel Eyes Offline
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Angel Eyes
Joined: May 2001
Posts: 4,599
Just thought I would post a link to this MSN story about preauthorizations and debit cards. Hosed at the gas pump

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#295228 - 09/29/05 11:45 PM Re: PIN Based Processing Problem
Banker Boy Offline
Member
Banker Boy
Joined: Oct 2003
Posts: 69
Florida
We pre-authorize for $1 and sometimes that causes problems. The $1 authorization stays on hold until the debit posts (usually 2 or 3 days later). In those few days, the customer has use of the funds. Later, they will complain that they thought the full amount of their purchase came out of their account immediately and didn't realize that they would be overdrawing their account by pulling out cash at the ATM. So really, either way, you can't win!

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