Paying at the pump with your debit card

I've had people ask me recently why it is that when they're paying for gas with debit cards at AFD's (Automatic Fuel Dispensers), the pump stops at $75 (yah, and that typically is no more than half a tank for many of us). Well, let's see if I can shed some light for you.

As a fuel merchant, you should be thankful this is happening to help is lessening potential fraud resulting in losses to you. As a customer, it can be irritating and, if you really want to fill up, you have to start all over again.

But, there's another thing that's happening with debits at the pump that is bugging consumers. Maybe you've noticed this yourself. You put $50 in the tank on your way home from work. After dinner, you gto your computer to do some on-line banking. Hey, wait a minute, you say, that station ripped me off. They charged me $75 for that $50 worth of fuel (as if $4.00 gas isn't bad enough). Well, that's not exactly what happened so let me explain.

When a debit card is swiped at the AFD, an "authorization" is sent to the bank. That triggers a hold of funds, which then has to be "reconciled" with the final purchase amount. If you go back to your on-line banking in a day or so, you'll see the actual amount you spent deducted from your account. This same scenario, often times happens with debit cards used in restaurants to allow for tip adjustments.

Visa Inc., the largest payment processing network in the country, said recently that it would be making changes in its systems this fall to allow debit card payments from gas purchases to clear much faster, usually within a few hours. However, in the meantime, gas buyers can avoid the debit card holds altogether by simply paying inside at the cashier after filling up. When you use your debit card, simply enter your pin number and the transaction will clear right away for the actual amount you spent.

Paying with a credit card at the pump also can trigger an authorization against your credit line, but, that's different than having a hold put on cash in your checking account. A credit card authorization wouldn't affect cardholders unless they were right up against their credit limits.