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