Visa offers some relief from painful 'debit holds'

The organization that writes the rules for processing payments you make with your Visa card will change them this fall to reduce the chances that an annoying “debit hold” placed on the money in your bank account will cause inconvenience or, in some cases, overdraft fees.

The rule in question has to do with how gasoline purchases made with a debit card are handled. Currently, when you swipe your debit card at the pump, the gas station can place a debit hold on up to $75 of the money in your account until the actual transaction clears through the system. Since that can take as much as two to three days, you may buy $20 worth of gas but be denied access to $75 of your money for several days. This can lead to bounced checks or other overdrafts, and the onerous penalties that they bring. (See "The Dark Secrets of Debit" for more of the problems that debit card users face.)

Under its new “real time clearing” rule, however, Visa will make it possible for holds to clear in as little as a few minutes and no more than two hours. “Consumers are feeling enough pain at the pump and we strive to relieve some of those frustrations through real-time clearing,” says Stacey Pinkerd, head of Global Debit Products at Visa.

The rule change, which will take effect this October, follows years of lobbying by Consumers Union and other organizations that complained the old rule was unfair to consumers. Gas stations must adopt the new rule in order for their customers to reap the benefits. 

“Americans are already getting squeezed by exorbitant gas prices,” says 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.”

Unfortunately, the change only applies to gasoline purchases, and not to other merchants that can also place debit holds, including restaurants, hotels, and car rental agencies. Moreover, Visa’s largest competitor—Mastercard—has yet to respond to calls to change its debit hold rule. CU is encouraging consumers to send a message to Mastercard telling them to end this problem with its debit cards.

You can find out how quickly your gas purchase is processed by checking your bank account on-line.  Once Visa’s new rules go into effect in October, you should ask your local gas station if it processes your gas purchase at the pump in real time.  You can also check this by getting your account balance two hours after using a Visa debit card to buy gas to see if the purchase cleared. If your local gas station doesn't process your purchase in real time, you can avoid debit holds by paying the station attendant with your debit card and PIN rather than swiping it yourself. Of course, you can also pay with cash.

Comments

[Reena]

Let's clarify something... gas stations do not put a hold on the consumers debit card. We have nothing to do with what Visa or MasterCard chooses to do when it processes a customers card at the pump. Neither is there a way for the gas station owner to "undo" this practice because we have no way to change the network parameters or even have access to the encrypted information that goes from the pump thru the network and to the banks, etc.

In your article you mention that Visa is stopping the practice in hopes that MasterCard follows... that should have told you already WHO is behind all this.

And you even admit that if a consumer chooses to swipe their card inside the store thru the store's terminal and prepay the transaction that there is no "hold" placed, because then it becomes a prepaid transaction and neither VISA nor MasterCard has yet figured out how to put a hold on those transactions.

So do us "gas station owners" a huge favor and get your facts straight... we don't even have any control over such issues as "real time" transaction or "delayed transaction". Once again this is up to who owns and operates the network. Since all we are allowed to do is pay exuberant fees to VISA, MasterCard, American Express and a dozen more Credit Card processors for the "privilege" to process their Cards...

[medical alert]

I have definitelyhad this happened before and it has caused some major issues..

it only took 24 hours but still $75 put me very close to the limit

[medical alert]

Thank you for this article!!

[Jack]

One time my car was running on fumes and I stopped at a 7-11 to get 10 dollars worth of gas. I had 30 dollars left in my account. When I swiped the card it told me to "see attendant". I saw the attendant inside and he tried to use my card but it came up as "declined". I called the bank that issued me the card and they explained that when I swiped the card at the pump they had charged me a holding fee which overdrafted my account and left me unable to access my money. So I ended up stranded at the gas station and had to walk about three miles up and then three miles back to borrow money from a friend at work. I got my money back a few hours later which was nice but it really sucked that I had to walk six miles in the summer heat after I had already worked outside for eight hours all because of a holding fee. I owned that 30 dollars and I only wanted to spend 10 of it on gas.

They should reconfigure the system so that you can select "debit" at the pump and then type in how much money you want to spend and then pump your gas until the meter reaches the dollar amount you selected. It's not rocket science. They screwed me. I'm supposed to be the damn customer.