Credit and Debit Card Blocks at the Pump
With gas prices soaring to over $4 a gallon, there’s a little something many consumers are running into that’s never been a problem before – limits and ‘blocks’ at the pump. Issuers and merchants have always had these limits and ‘blocks’ in place, but it’s never been an issue before because gas prices haven’t been as high.
What this means is that issuers and merchants set a predetermined limit that you can spend for at-the-pump purchases. This is usually anywhere from $50-75. When you swipe your card – debit or credit – the merchant does an authorization with the card company. Since the total purchase is unknown at this point, there is a ‘block’ on a specific amount of funds – usually the $50-75, but it can be as little as $1. The problem that people are running into is that since gas prices have increased, so is the amount that folks are putting into the gas tank. When the amount reaches the limit, the pump shuts off. Consumers are left there with their tanks unfilled – already aggravated by the high prices they have to pay.
In addition to the annoyance, there’s something else happening as well. When you use credit at the pump, that hold isn’t automatically released once the transaction is complete. According to Visa, merchants and/or financial institutions – depending on who is holding the funds – have three business days to release the holds. But, for some, these holds can cause all manner of fees to hit their accounts if it causes them to go over their limits or overdraw their accounts. Some banks have it set up where you’re not actually charged that fee as long as the actual purchase clears for less than what you have in the account; however, credit card companies are not always so gracious.
Naturally, the number of complaints to merchants has significantly increased, but in most cases it’s not the merchant’s fault, it’s the card issuer’s fault. The problem is that there’s nothing you can really do about either. These limits are set in place to help avoid fraud. The first thing someone who steals your card is going to do is go fill up their gas tanks. By limiting the amount the fraudsters can get, the credit card company or financial institution limits their liability when you report the purchase as fraudulent.
Fortunately for me I have a small car so this has not been an issue in recent times. However, I did experience this once when I was moving. In addition to using the gas station three times that day, I was also filling up a U-Haul and that ended up sending me over my limit for that transaction. It wouldn’t let me fill up any further and I had to go inside to actually complete the transaction. I didn’t think about it at the time, but there’s another way to circumvent that as well – a second transaction.
These limits and holds placed on the card are only on a per transaction basis. You can complete the first transaction with the hold and then reinsert your card for a second transaction. It’s a little bit of a hassle for consumers to do that, but if you really don’t want to walk inside, you at least have this option. Unfortunately, this option tends to hit merchants hardest because they pay on a per swipe basis. If each customer swiped their card two or three times, that would be one outrageous bill for the merchant at the end of the month. It impacts us because they have to compensate somehow, which is usually in the form of higher prices on gas and convenience items.
Have any of you experienced this problem at the pumps? Do you think the limits should all be raised in light of the gas prices, or left as they are because it’s only a temporary situation?
Hey, I’m optimistic that gas prices will go down!