Chevron Corp. has launched an educational campaign to explain why banks routinely authorize debit transactions at gas stations that are much larger than the actual sale.
The process, known as "debit hold," can confuse or anger consumers, and sometimes even causes people to overdraw their accounts.
Chevron is placing decals at gas pumps around the country that describe the payment process.
"Chevron is not responsible for placing or removing holds," the decal says; instead, it makes clear that the debit holds are imposed by issuers as a way to ensure that there are enough funds in customers' accounts to cover the sales.
Chevron acknowledged that it is distributing the decals, but would not provide an executive to discuss the program.
The National Association of Convenience Stores has applauded the campaign, and said banks should do more to explain their role in the debit-hold process.
Nessa Feddis, senior federal counsel for the American Bankers Association, said it is in the best interest of all parties involved in fuel purchases to prioritize the consumer. "The last thing the gas stations, [card] networks and banks want is the customer to be inconvenienced," she said.
Feddis said the issue is becoming more important because more people are shifting their spending habits to favor debit cards. Signature-debit transactions are at the center of the problem because banks often impose holds of $50 to $100 — more than enough to cover a full tank of gas — that can last up to three days.
That means the bank puts aside $50 to $100 until the transaction is settled, even if the consumer bought $10 worth of fuel.
Some issuers even charge overdraft fees when cardholders do not have enough funds in their account to cover a hold, said Jeff Lenard, a spokesman for the convenience store association.
Credit card gas purchases also are subject to holds but are rarely a problem for consumers because the total rarely exceeds consumers' credit limits, Lenard said.
The holds on PIN-debit fuel purchases, which the industry often calls real-time transactions, last only a few minutes.
After the transaction is complete, the issuer is notified automatically and the hold is replaced by the actual purchase amount, Lenard wrote in a consumer fact sheet prepared by the NACS.
With PIN debit, retailers set the amount for the hold, Lenard wrote. If the hold amount is too high, the system could reject the transaction if the customer does not have the funds in their account.
However, if the hold amount is too low, the retailer risks not getting paid if the actual purchase exceeds the customer's balance.
If retailers approve purchases that exceed the size of the hold, they are liable for the purchase.
Lenard hopes Chevron's efforts, combined with the NACS' attempts to clarify the issue, will strengthen the relationship retailers and oil companies have with consumers. "The more confusion there is, the easier it is for [a customer] to walk away and say 'I don't care, I'm blaming the retailer,' " he said.
Oil Express, a trade publication, has reported that gas companies are increasingly fielding calls from angry consumers. Some customers have even resorted to violent threats to show their displeasure with debit holds, it reported.
"I even had one woman say that if we didn't give her money back, she was going to burn down the station," a retailer told Oil Express.
Feddis said improved payment systems at gas pumps are helping address the issue. Two years ago, many gas stations upgraded their terminals, providing nearly instant settlement for signature-debit transactions. "But it's still an issue at the mom-and-pop gas stations," Feddis said.
The card networks are encouraging the oil industry to upgrade all its pumps, Feddis said.
Visa Inc. offers fuel merchants several payment services that can reduce issues related to holds. Its Real-Time Clearing is a processing option that reduces the authorization and clearing cycle, "which can significantly reduce hold times that issuers place on cardholders' accounts," the company said.
The service enables Visa issuers to release all holds within two hours of the authorization request or when the transaction clears, whichever is earlier. Ninety-nine percent of transactions clear within 10 minutes, Visa said, and more than 99% of automated fuel-dispenser transactions routed over its PIN-debit network, Interlink, clear within 15 minutes.
MasterCard Inc. said it is establishing authorization requirements that will take effect later this year; the requirements will result in the release of holds within two hours.
