On 25-Feb-12 11:30, Adam H. Kerman wrote:
Roland Perry wrote:
at 16:40:17 on Sat, 25 Feb 2012, Adam H. Kerman remarked:
Really? There's no concept of pre-authorizing the transaction, then
charging the customer the approved charge in two separate steps, both
performed at the retail terminal?

No. I routinely spend amounts of the order of a thousand dollars at
retailers by Chip and PIN card, and it's a one-shot process.

If that's true, then I suspect your credit limit is stored on the card.

In a typical transaction in the US, the customer or cashier swipes the
card at the terminal (which one does it depends on the layout). Data is
exchanged with the credit card processor's server. Data sent back to
the merchant's terminal is the account credit limit (not disclosed to
the cashier unless there is a situation with a high-value purchase like
jewelry) and authorization code.

Really? I've never heard of card processors telling merchants what the
credit limit (or available credit, which is what I suspect you meant) on
a card is, just whether the authorization attempt succeeded.

Note that an authorization is for a particular amount of money, so there
is no _need_ for the merchant to know how much credit is available in
excess of that.

The authorization code is critical,
which is why merchants cooperate in pre-authorizing sales. If a merchant
submits a transaction that wasn't pre-authorized and the bill isn't paid,
the merchant's account is charged back.

That's not how it works. Authorization is confirmation from the card
issuers that a charge for the specified amount (or less) can be posted
successfully.

It has no effect on chargebacks; a customer can dispute posted charges
whether or not they were authorized first.

It also has nothing to do with whether the bill is paid, which is
entirely a matter between the card issuer and the customer.

During authorization, there is a temporary freeze put on the cardholder's
credit limit in some fixed block amount, such as rounding up to the next
$100. This block must exceed the actual purchase amount.

Perhaps your issuer does that, but every card I've had puts a "hold" on
the exact amount the merchant requested authorization for.

Some merchants, eg. restaurants and bars, will authorize more than the
total assuming you'll make additional purchases and/or add a tip, which
gets corrected when the final charge is posted. I've never seen any
other type of merchant do that.

Gas stations usually authorize for $1 and then (try to) post the full
amount. Technically this is risky for them, as the posting may be
denied if the card doesn't have enough credit available at the time, but
apparently the common risk is closed/over-limit cards.

S

--
Stephen Sprunk "God does not play dice." --Albert Einstein
CCIE #3723 "God is an inveterate gambler, and He throws the
K5SSS dice at every possible opportunity." --Stephen Hawking

Stephen Sprunk wrote:
On 25-Feb-12 11:30, Adam H. Kerman wrote:
Roland Perry wrote:
at 16:40:17 on Sat, 25 Feb 2012, Adam H. Kerman remarked:

Really? There's no concept of pre-authorizing the transaction, then
charging the customer the approved charge in two separate steps, both
performed at the retail terminal?

No. I routinely spend amounts of the order of a thousand dollars at
retailers by Chip and PIN card, and it's a one-shot process.

If that's true, then I suspect your credit limit is stored on the card.

In a typical transaction in the US, the customer or cashier swipes the
card at the terminal (which one does it depends on the layout). Data is
exchanged with the credit card processor's server. Data sent back to
the merchant's terminal is the account credit limit (not disclosed to
the cashier unless there is a situation with a high-value purchase like
jewelry) and authorization code.

Really? I've never heard of card processors telling merchants what the
credit limit (or available credit, which is what I suspect you meant) on
a card is, just whether the authorization attempt succeeded.

No, I don't mean available credit nor total credit, neither of which
are the merchant's business. I mean an amount frozen to be used for
that particular transaction, that isn't available for other transactions,
until cleared.

Note that an authorization is for a particular amount of money, so there
is no _need_ for the merchant to know how much credit is available in
excess of that.

The amount held for the transaction is somewhat higher than the amount
charged because it's rounded up.

The authorization code is critical, which is why merchants cooperate
in pre-authorizing sales. If a merchant submits a transaction that
wasn't pre-authorized and the bill isn't paid, the merchant's account
is charged back.

That's not how it works. Authorization is confirmation from the card
issuers that a charge for the specified amount (or less) can be posted
successfully.

I have no idea what distinction you are making, and neither do you.

It has no effect on chargebacks; a customer can dispute posted charges
whether or not they were authorized first.

I made no comment about customer disputes. If the bill isn't paid because
it's legitimate or because it's illegitimate (stolen card, identity theft),
the merchant's account is charged back.

It also has nothing to do with whether the bill is paid, which is
entirely a matter between the card issuer and the customer.

Bull****. If the transaction wasn't authorized, and the bill isn't
paid, the merchant is out the money. That's why they have the card
terminals to obtain authorization, duh, and they don't use the
impression machines to make old fashioned charge slips.

During authorization, there is a temporary freeze put on the cardholder's
credit limit in some fixed block amount, such as rounding up to the next
$100. This block must exceed the actual purchase amount.

Perhaps your issuer does that, but every card I've had puts a "hold" on
the exact amount the merchant requested authorization for.

Not between the time the authorization is requested and the transaction
ID number is issued, it's not, and sometimes, the higher amount doesn't
clear for a couple of days. It got to be a problem at gas stations.

Gas stations usually authorize for $1 and then (try to) post the full
amount.

Not true. The amount might be $75, depending on if it's Visa or MC.
Sometimes gas stations have signs up telling purchasers that if the tank
purchase exceeds that amount, the purchaser has to break up the purchase
into two transactions. The credit card clearing houses know when cards
are used at gas pumps for this reason.