High gas prices can complicate credit and debit card purchases
By Mark Glover - mglover sacbee.com
Published 12:00 am PDT Friday, July 4, 2008
Story appeared in BUSINESS section, Page D1
http://www.sacbee.com/103/story/1059876.html
With thousands of Californians preparing to hit the road for the three-
day Fourth of July holiday weekend, many could encounter a few
surprises at the gas pump.
And we're not talking about the fuel price.
Instead, some pay-at-the-pump transactions involving credit and debit
cards are catching motorists unawares.
The first is when the pump automatically shuts off at $75, even if you
haven't finished fueling up.
Hitting that $75 cutoff when using a credit card was once unlikely,
but rising gas prices have made it increasingly common.
It's set at that amount because service stations and other retailers
selling gas are liable for fraudulent credit card transactions above
$75, under terms set by Visa and MasterCard.
What's the easiest solution when you abruptly hit that $75 cutoff?
Start over.
That's what Harry Lewis, a Citrus Heights construction worker, does to
fill the 38-gallon tank on his heavy-duty Ford pickup. As soon as he
hits the $75 limit and the pump shuts down, he starts over with a
second fill-up.
"My credit card bills are out of sight, but what am I going to do?"
said Lewis said. "I have to have the truck to work."
Other solutions are to pay cash or go inside and use your credit card
at the cash register.
Another potential at-the-pump pitfall involves use of an offline debit
card, also known as a "signature debit transaction."
Offline debit cards typically bear the logos of major credit card
companies, such as Visa or MasterCard, and carry some restrictions,
including a daily limit or a limit equal to the current balance in the
user's bank checking account.
Unlike a regular online debit card, they do not require a PIN number.
Any transactions typically post to the holder's checking account
within 48 to 72 hours. It's that lag time that presents a potential
problem.
Because individual gas purchases vary so much, service stations have
long had the ability to set limits on "preauthorized" amounts. In past
years, preauthorization limits were set around $35. But as gas prices
have soared, preauthorization amounts have likewise gone up, to $75.
Today, a consumer swiping a Visa- or MasterCard-branded offline debit
card at the pump will likely have a 48-to-72-hour hold on that $75
until it's posted to his or her checking account, even if the customer
spent only $20 to top off the tank.
(Note: This is not true for a regular online debit card using a PIN
that automatically debits the amount, usually within minutes.)
The credit card industry does not have firm figures on the number of
U.S. debit cards in circulation but estimates peg it at more than 75
million. A 2007 study conducted by Boston-based Dove Consulting Group
re****ted that 85 percent of debit cards in circulation were capable of
initiating both PIN (online) and signature-authorized (offline)
transactions. Dove Consulting said signature debit transactions
accounted for 62 percent of all debit transactions at the point of
sale, with PIN debit used 38 percent of the time.
If a customer's checking account balance was $50 before the offline
debit card swipe initiated the $75 preauthorization hold, the account
might be shown as overdrawn. That, in turn, can create a situation
where the consumer is denied access to checking account funds or hit
with an overdraft charge.
While credit card companies, retailers and bankers are in general
agreement that preauthorization practices guard against fraudulent
transactions, there is recognition that consumers using offline debit
cards can get burned.
There aren't too many good options for the retailer, say industry
sources. "Sure, the retailer can stop it. The retailer can force you
to (use) PIN debit or force you to pay cash," said Jeff Lenard,
spokesman for the Alexandria, Va.-based National Association of
Convenience Stores. But those choices, he noted, will likely drive
customers to competitors.
Lenard advised consumers using offline debit cards to keep close track
of how long a checking account hold stays in place on their at-the-
pump transactions.
"If they're not seeing those (holds) drop off within three days, they
need to call the bank," he said.
|
