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Gas consumers to get relief on debit card holds

Friday, June 27, 2008

VISA Announces Plan to Reduce Debit Card Holds at the Gas Pump

Consumers Union Praises Plan and Calls on MasterCard to Follow Suit
So Customers Won’t Risk Overdrawing Their Accounts

SAN FRANCISCO, CA – Consumers Union praised a plan today announced by VISA to virtually eliminate excessive holds on debit card transactions beginning this October when customers pay for gas at the pump. Right now, many gas stations impose a hold on funds in their customer’s bank accounts for an amount that exceeds what has been spent on gas. These debit holds can last for up to three days and can be particularly burdensome for consumers in today’s economy.
Starting in October, gas stations will be able to use a “Real Time Clearing” procedure so that VISA debit card transactions will clear in two hours or less. Consumers Union called on gas stations to take advantage of the new procedure and for MasterCard to adopt a similar policy.
“Americans are already getting squeezed by exorbitant gas prices,” said Michelle Jun, staff attorney for Consumers Union. “It’s unfair for gas stations to impose a hold on their customers’ own money for amounts that exceed how much they’ve spent on gas. VISA deserves credit for taking this step. Now it’s time for MasterCard to end unfair debit holds at the pump and for every gas station to adopt this new process.”
Today, when a customer swipes a debit card at the pump to pay for gas, a preauthorization request is made to the customer’s bank to make sure the card is valid and that there are sufficient funds in the account. The preauthorization request also places a hold on an additional amount. The hold on these funds won’t be lifted until the hold and the purchase amount are matched up by the customer’s bank in about three days.
For example, when a customer purchases $30 in gas using a debit card at the pump, the gas station may make a request to hold $75. But the customer won’t be able to purchase anything else with that $45 until the gas purchase transaction clears with the bank.
“High gas prices are already putting a strain on many family budgets,” said Michelle Jun, senior staff attorney with Consumers Union. “For some consumers, a lengthy debit hold can make matters worse by making it harder to pay for other necessities or by triggering overdrawn bank accounts and penalty fees.”
Starting In October, when a customer swipes a debit card at the pump under VISA’s new “Real Time Clearing” procedure, an estimated purchase amount based on the gas station’s average transaction will be authorized. After the customer finishes pumping gas and the actual purchase amount is determined, the customer’s bank will have up to two hours to release any frozen funds. VISA has indicated that most transactions will clear in real time – usually in less than 15 minutes.
The vast majority of gas purchases are paid for at the pump. The improvement announced by VISA starts after the summer driving season and each gas station will have to take steps to use it. For now, gas consumers can avoid holds on debit payments altogether by paying for their purchases inside the gas station with the attendant using a PIN or by paying with cash.
Michelle Jun or Gail Hillebrand – 415-431-6747