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About double or pending charges on your bank account or credit card

SOLVEDby QuickBooks20Updated March 01, 2024

Double or pending charges on your bank account or credit card do not necessarily mean that you have been charged twice.

Authorization hold (also called card authorization, preauthorization, or preauth) is the banking industry practice of authorizing electronic transactions made with a debit card or credit card, and holding the balance as unavailable either until the merchant clears the transaction (also called settlement), or the hold "falls off" and makes the balance available again.

For debit cards, authorization holds can fall off the account from one to five days after the transaction date, depending on the bank's policy. For credit cards, holds can last as long as 30 days, depending on the issuing bank.

When a merchant swipes a customer's credit card, the credit card terminal connects to the merchant's acquirer, or credit card processor, who verifies that the customer's account is valid and that sufficient funds are available to cover the transaction cost. At this point, the funds are "held" and deducted from the customer's credit limit (or bank balance, for a debit card), but are not yet transferred to the merchant.

At the end of the day, the merchant instructs the credit card machine to submit the finalized transactions to the acquirer in a "batch transfer." This begins the settlement process in which the funds are transferred from the customer's accounts to the merchant's accounts. This process is not instantaneous (although many believe it is). The transaction might not appear on the customer's statement or online account activity for a day or two, and it can take up to three days for funds to be deposited in the merchant's account.

For example, if an individual has a credit limit of $100 and uses a credit card to make a purchase at a retail store for $30, his available balance immediately decreases to $70 because the merchant has obtained authorization for a $30 purchase from the individual's bank by swiping the card through its credit card terminal. However, the actual balance in the bank is still $100, because the merchant has not actually collected the funds in question. The actual balance is not reduced until the merchant submits their batch of transactions and the banking system transfers the funds.

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