Why are some pending debit card transaction amounts different than the actual amount?
Category: Personal Service: Debit/ATM Cards | Updated: August 6th, 2015
Pending transactions are transactions that are presented to the Bank during the current business day or after the processing cut-off time for the previous business day (which varies between 2:00 PM and 4:00PM). Pending transactions may include a variety of items including, direct deposits, ACH items, ATM transactions, and Debit Card transactions. When these items are presented to the Bank they are "memo" posted to your account. The transactions will permanently post to your account, generally, in 1 – 3 business days depending on the item. When the amount is "memo" posted to your account, your account balance reflects these items. Your account will be increased by any deposit transaction and decreased by any withdrawal. Some transactions may cause a little confusion as to the way they are posted; Debit Card transactions in particular. There are several instances where a Debit Card transaction may "memo" post for an amount that is different than the actual purchase price. The authorization process used by the merchant determines the amount that "memo" posts to your account. The following is a detailed description of authorization practices in six major categories.
When you receive the bill and present the Debit Card for payment, the tip amount has yet to be indicated. The waiter or cashier obtains authorization for an amount that adds an estimated tip (usually 20%) to the base bill. After authorization, the waiter presents the purchase slip for signature. At this point, you add a tip and total the bill. This final total may be for more or less than the estimated amount for which the restaurant obtained the authorization. The estimated total could stay on the system for 1 – 3 business days until the clearing item for the amount actually charged reaches the Issuer (FIB). You may become aware of the difference between the authorized amount and the actual amount through Telephone Banking, ATM inquiry or Internet Banking inquiry.
When you present your Debit Card at a gas pump, the actual amount of gas you are purchasing is not available. In order for the system to provide an authorization an amount must be present. Since the amount of the purchase is not known until the gas has been pumped an amount determined by the gas station is transmitted. The amount can vary and may be as high as $100. In most cases the gas station will send an authorization for $1.00 for gas pump transactions. The estimated total could stay on the system for 1 – 3 business days until the clearing item for the amount actually charged reaches the Issuer (First Interstate Bank). You may become aware of the difference between the authorized amount and the actual amount through Telephone Banking, ATM inquiry or Internet Banking inquiry.
When you present your Debit Card in-store at a gas station the actual amount of the transaction will be presented for payment. The gas station attendant will run the card after services are rendered for the amount of gas pumped and/or the amount of miscellaneous items purchased.
When you present a Debit Card at registration, the clerk or cashier requests an authorization for an amount based your expected length of stay. An additional amount may be added to the room rate to cover other guest services, such as movies or parking. Many are not aware of the exact amount authorized or that your financial institution may place hold for that amount. If you check out early, stay an extra night, or use more hotel services than estimated, the actual transaction amount (incoming clearing item) could differ significantly from the authorization memo posted amount. In some cases, the authorization memo posted amount could limit your purchasing power or funds availability. You may become aware of the difference between the authorized amount and the actual amount through Telephone Banking, ATM inquiry or Internet Banking inquiry.
You provide the order information, and then the retailer adds any applicable tax and shipping and computes the total amount. You provide the Debit Card number, expiration date, and billing address. The billing address for a Debit Card is the statement address for the linked checking account. Merchants are required to ask for a billing address. The authorization process for a telephone or online order requires that your financial institution approve both the dollar availability and the billing address. If the billing address given to the merchant is not the same as the one shown on your statement, the transaction may be denied, even if funds are available in your account. The request for authorization from your financial institution is rarely made when you are on the telephone or online. Since the authorization process is usually done after you have completed the telephone call or signed off the Web site, the purchases can be denied at authorization for a number of reasons including daily limits, funds availability, a hold on a recent deposit, or a billing address mismatch. If you have recently moved you may give a correct, but new, billing address that will not match your institution's records. It's also easy if you receive your statement at the office, a P.O. Box, or other non-home location to misunderstand the request for billing address and provide a home or "ship to" address. This triggers a mismatched address denial.
The ticketing agent adds up the amount of all tickets being purchased by a customer and requests authorization for the total. However, because airline accounting and tracking is based on individual tickets, your Debit Card statement will show prices for individual tickets, not the total amount. Fees for changing a ticket will also be shown separately on the statement. Seeing a number of individual purchases for the same amount from the same airline can be confusing.
After you decide on the item(s) to purchase, the merchant adds the tax amount and requests authorization for the total amount. Once authorized, you sign the slip, and the transaction is completed. The authorization memo item and the clearing item are for the same amount. This type of transaction is a convenient and simple replacement for cash or a check, for both you and the merchant.