Is a $1 Pre-Authorization Too Low or Effective Enough?

[Carl]

I have a new credit card system in place. My 8-years-old previous one was PATHETIC. Get this...w/ my old system you could actually take a Sonic Gift Card and swipe it in my handbay and the bay would turn on! Not until I saw that card # "declined" could I then manually enter that fast food gift card into the system to then "train" all my terminals to reject that card. For 8.5 years I've had "plastic criminals" steal vacuum cycles, fragrancer and spot remover cycles, dog washes and ss bay washes. No longer! But...

With this new system I've been getting many calls and most recently, an informative complaint as to why a $12 pre-auth is too high. If the average ss bay wash is $5.00 this customer feels the pre-auth should only be around $6 or maybe even $1 because in his eyes, that "hold" on those funds is "unfair" being that if he washed three of his family's cars here he'd essentially have $36.00 of spending money "HELD" for as many numbers of days as the card issuing bank's terms were before they released those "held" funds which sometimes could take very many days.

If I drop my pre-auth to just $1 do you think that's too low? If I drop it to $6; I feel like it'll create more problems because it will look too close to what the actual charge is and more people will think they are overcharged versus the $12.00 pre-auth which looks more obvious, I'd think, to people that it's only a pending charge.

Lastly, I called Mercury Payment Systems and one lady there said that I ought to really changeover my Unitec system to using a "hot file" rather than pre-authorizing any amount because "pre-auth" is designed more for businesses that receive tips like restaurants plus, a new Visa rule called "Visa Misuse of Authorization" will penalize me 4.5 cents a transaction if my transactions qualify for that fine?

Your thoughts on setting your ss bays' pre-auth amount high? lower more toward the actual ticket amount or maybe even just to $1?

Thanks! - Carl

 

[GoBuckeyes]

Carl, we accept credit cards in our self-serve bays and are set up to 'count up' rather than down. We authorize the card for $25 because that is what we have our maximum limit set to (system limit as well). Our average is obviously lower than $25, however, I wouldn't lower our maximum charge or the authorization. We do have people max out the system and I doubt if the limit was set to $15 or $20, they would re-swipe to spend another $5 or $10.

We also have at least 1 or 2 people a week that have used the system call and say they were overcharged. I have bright yellow stickers mounted right below the card swipes that say in black type "Card will be authorized for $25. $25 may be held for up to 48 hrs depending on your bank." Do you think if we only authorized and max'd out at $10, those phone calls would stop? They wouldn't. People are too lazy to take the time to read. When I call these customers back and explain it to them, they are fine with it. It can be annoying, but, it also is an opportunity to impress the customer by responding quickly and putting their concern to bed. Other operators may see it differently.

 

[Earl Weiss]

HAd a similar situation with a gas customer recently. She was angry her card was "Charged' $90.00 fopr a $45.00 purchase.

I basicaly tell them the issue lies with their bank. / credit card company.

 

[Bubbles Galore]

We also have at least 1 or 2 people a week that have used the system call and say they were overcharged. I have bright yellow stickers mounted right below the card swipes that say in black type "Card will be authorized for $25. $25 may be held for up to 48 hrs depending on your bank." Do you think if we only authorized and max'd out at $10, those phone calls would stop? They wouldn't. People are too lazy to take the time to read. When I call these customers back and explain it to them, they are fine with it. It can be annoying, but, it also is an opportunity to impress the customer by responding quickly and putting their concern to bed. Other operators may see it differently.

I couldn't have said it better myself!!!

 

[DiamondWash]

I just got off the phone with a customer about this and I hopped on ACF and to my amazement I am not alone.

 

[bighead]

We do a $15 pre authorization and I've only had two people call and complain that it was "holding" their pre-auth too long.

Both of them were with chase bank.

I told them it was the discretion of their bank to "hold" their money that long, and that my credit union never does. I recommended they talk to their bank. (I usually take a lot more words, and use very nice language to get the customer to that point.) They always end up thanking me, and I assume, calling their bank.

Funny story: a couple of weeks ago a guy called and said that the self serve charged him for $18 and that he only swiped once. I told him, "no problem, just give my your last 4 digits of your card and the date and time you were there in an email and I will cross-check the cameras with the batch online" he said he would, but I never received an email.

I'm assuming once he found out I had cameras he knew I would catch him in his lie.

 

[Ric]

I was getting a couple calls a week regarding the pre-auth charge. I finally put a blurb in my voice mail message which explained it. That has taken care of it.

 

[MEP001]

If I drop my pre-auth to just $1 do you think that's too low?

Your "pre-auth" amount will also be whatever the maximum charge for a purchase is, so yes, that's too low. You'd be much better off just going with a per-swipe credit of $1 instead.

IMO anything less than $10 is too low. I raised ours to $15 because the occasional customer would max out the $10 and think they couldn't use their card anymore and would deposit cash to finish.

Your whole problem, assuming it's the same one we have, is with debit cards. People will swipe their debit card, wash and rush home to check their statement. They see $15 on there and immediately call and complain. Some banks including mine clear it quickly, even as soon as the opening of the next business day, but some take as long as five business days. I'd recommend posting signage explaining how it works and those that don't like it suggest they not use their debit cards.

 

[Earl Weiss]

People will swipe their debit card, wash and rush home to check their statement. They see $15 on there and immediately call and complain. .

Heck, they don't rush home now. They check it on their smart phone, or if this causes them to reach their limit their next transaction is declined or they get a text / e-mail alert.

 

[Whale of a Wash]

Have we reached the next plateau with our customers that don't have the cash to wash. Now they don't have the credit to wash? With credit like that-- They soon won't be able to use the Redbox.

 

[mjwalsh]

Have we reached the next plateau with our customers that don't have the cash to wash. Now they don't have the credit to wash? With credit like that-- They soon won't be able to use the Redbox.

John & others,

I know there is percentage of people who in order to use a credit card they have to use a prepaid card. A while back I had to diffuse a situation where some 6' 10" African American massive hulk of a person was furious because he thought our ATM charged his prepaid card an extra $5. I told him to call the 800 number on his card ... I was just lucky that someone on the other end of the phone told him it was their mistake & it would be corrected immediately!!!

mike walsh king koin of bismarck

 

[MEP001]

I know there is percentage of people who in order to use a credit card they have to use a prepaid card.

?? Prepaid cards aren't credit cards.

 

[Indiana Wash]

We do a $15 pre authorization and I've only had two people call and complain that it was "holding" their pre-auth too long.

Both of them were with chase bank.

I told them it was the discretion of their bank to "hold" their money that long, and that my credit union never does. I recommended they talk to their bank. (I usually take a lot more words, and use very nice language to get the customer to that point.) They always end up thanking me, and I assume, calling their bank.

Funny story: a couple of weeks ago a guy called and said that the self serve charged him for $18 and that he only swiped once. I told him, "no problem, just give my your last 4 digits of your card and the date and time you were there in an email and I will cross-check the cameras with the batch online" he said he would, but I never received an email.

I'm assuming once he found out I had cameras he knew I would catch him in his lie.

What he said. I charge $15 pre-auth and have never received a complaint.

 

[Earl Weiss]

?? Prepaid cards aren't credit cards.

Technicaly... No. From a practical standpoint people who obtain or use say a prepaid Visa or MC call them that and use them the same way.

 

[MEP001]

Technicaly... No. From a practical standpoint people who obtain or use say a prepaid Visa or MC call them that and use them the same way.

Yes, but his whole sentence together made no sense at all. No one is going to purchase a prepaid card with cash to use at an ATM to get cash...

 

[mjwalsh]

John & others,

I know there is percentage of people who in order to use a credit card they have to use a prepaid card. A while back I had to diffuse a situation where some 6' 10" African American massive hulk of a person was furious because he thought our ATM charged his prepaid card an extra $5. I told him to call the 800 number on his card ... I was just lucky that someone on the other end of the phone told him it was their mistake & it would be corrected immediately!!!

mike walsh king koin of bismarck

Yes, but his whole sentence together made no sense at all. No one is going to purchase a prepaid card with cash to use at an ATM to get cash...

Mep, Earl, & others,

I agree I could have made it more clear ... about the fact that my large foreboding friend was charged ZERO AMOUNT since he was just checking his prepaid credit card account balance at our ATM for FREE! The ATM also prints out on thermal paper ... the prepaid credit card account balance included in the free verification public service. Hopefully, this clarification will be helpful.

True & Factual Story!

mike walsh king koin of bismarck

 

[Earl Weiss]

Yes, but his whole sentence together made no sense at all. No one is going to purchase a prepaid card with cash to use at an ATM to get cash...

Some do it as a safety issue. They don't want to carry cash due to theft concerns, and the then the card can be used with a PIN to get cash as needed. Also, some payroll systems now will load a card with value that can be accessed thru an ATM. We do this now.