Filling stations, banks disagree on account holds


Ever noticed a little sign at the gas pump that says your bank may place an authorization hold on your checking account, anywhere from $1 to $125?

The gas stations say it's the banks' doing; the banks say it's the gas stations.'

According to Jason Agee, a card support specialist with Paducah Bank, the authorization hold is made so the station can be sure the customer has a real account.

"The purpose behind the hold is to ensure a customer has the money in their account and can purchase the gas at that point in time," Agee said.

Jamal Kheiry, communications manager for Marathon Petroleum Corp., said when a customer swipes a debit card at the pump, the network dials out for $1 to make sure the card is valid.

"If it is, the pump 'opens' and allows the customer to fill his or her tank," Kheiry said in an email. "The banks have the ability to override that $1 and put a hold on the account for whatever sum they deem necessary."

A representative from BB&T Bank in Paducah said stations could charge a larger amount.

"(Retailers) are just checking to see if the account is active," the representative said. "They can do that for whatever amount they want, but typically it's a dollar." The representative said the bank has nothing to do with how much is withheld from an account.

Jeff Lenard, vice president of Strategic Industry Initiatives for the National Association of Convenience Stores, said the banks and stations are both right and wrong.

"The amount of the hold is determined by the store (really the store's bank)," he said in an email. "The length of time of the hold is determined by the customer's bank. The retailer never has possession of this money, and a long hold does not benefit the store in any way."

Still, the stations could charge a hold as much as $125, even if someone gets gas for much less. For debit card users, this could be a problem.

Agee said it's unfortunate that the stations would hold funds because "those funds are being held out of the customer's balance."

He added that it is not a problem for credit cards because the stations may be charging only against credit. Debit cards, however, are withholding actual dollars in a customer's account.

Kheiry said Marathon stations don't have direct access to any customer's account.

"They have the ability only to settle the transaction for the dollar amount pumped," he said. "Beyond that, we do not have any capability to get into or out of anyone's account, and do not even see full account numbers for transactions completed at stores."

He reiterated that some banks say that the vendor is holding the funds, but vendors have no access to anyone's account.

"The bank is holding the funds to ensure that the transaction is covered," Kheiry said.

While they may disagree about who is actually withholding the dollar amount, both sides say that it is the gas stations that initiate the charge. Lenard said some stations charge more to cover themselves in case something goes wrong.

"The bank controls the timing and will make the retailer pay for it if there is any problem," he said. "Yes, the retailer decides on the amount to protect his liability, but the bank decides when to release the hold."

He said banks could release the hold within seconds if they wanted to, and then no one would probably notice.

"Banks tend to take their time paying the retailer and releasing the hold because the money is then in the bank longer and the bank gets the 'float' on the money," Lenard said. "If you could draw interest on someone's money for a few days and blame someone else for it, wouldn't you?"

The problem can be avoided altogether if you are willing to prepay inside. There is no hold on an account because the amount of the transaction is already known when the card is swiped at the register.