In October, buying gasoline will become a little bit easier…
In response to complaints by consumers and attention from the media, Visa will reduce the time it takes to clear accounts that are put on hold due to large gas purchases. For Visa cardholders, excessive holds that freeze funds for a day or two (or three) will become a thing of the past. “While Visa cannot lower gas prices, there are things we can do to help make the process of buying gas easier for our cardholders,” says Bill Sheedy, Visa’s global head of corporate strategy and business development.
Existing policies allow gas stations to place a temporary hold on debit card funds to verify the card is valid and to insure there are sufficient funds in the account to make the payment. With the rapidly rising cost of gasoline, the amount put on hold has been increased and is often a larger amount than needed to cover the purchase. For example, if you buy $30 in gas, a preauthorization request is made to your bank for $75, which is essentially a $45 freeze until your gas purchase clears. Visa cardholders can see a hold as high as $75 on their debit account, leaving a possible financial hardship without access to needed funds and perhaps unwittingly causing an overdraft to their account (with fees). While most holds only last a few hours, it can take up to three business days for a financial institution to clear a hold.
Visa’s new procedure will cut that hold time and use a ‘real time clearing’ procedure. “Real Time Clearing” will take effect in October and will release frozen funds in less than two hours – many should clear in 15 minutes. The plan would also require gas stations to limit the amount frozen to the cost of an average gasoline purchase at each station. Consumers can currently avoid the hold by paying with a debit card inside a gas station or by using cash.
MasterCard hasn’t announced similar plans yet, but it’s safe to assume they’re working on a solution to cut down account hold times as well. The Consumers Union, an independent consumer rights organization, called upon MasterCard to follow suit following Visa’s announcement last week, the organization’s staff attorney Michelle Jun said.
* To help reduce gasoline costs, be sure to see our gasoline rebate credit cards.