Drivers who pay with debit cards at the pump may soon feel less of a pinch from lengthy freezes on their accounts.
In response to consumer complaints and media attention, Visa announced that it would reduce the time it takes to clear holds for customers paying for gas with a debit card.
Most gas stations freeze a small amount of money for purchases at the pump to verify that an account exists. While these freezes on an account usually last a couple of hours, it can sometimes take up to three business days for a bank to clear a hold.
Visa's new “Real Time Clearing” procedure, which will take effect in October, would clear transactions in less than two hours.
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With rising gas prices, many stations have increased the amount they hold to make sure there are sufficient funds in a customer's checking account. This past weekend, regular unleaded gas surpassed $4 a gallon in the Charlotte area.
A customer can be left with both a high-priced gas purchase and a hefty hold, which for Visa card holders can be as high as $75. As a result, some consumers may find themselves without needed funds or unknowingly overdrawing their accounts.
Complaints from several local consumers centered on area Shell and Exxon stations, the Observer reported in early June. One consumer told the Observer that a local Shell station had put a $90 freeze on her account for a $25 gas purchase.
“That could be money you need to do grocery shopping with,” said Red Gillen, senior analyst for Boston-based financial research firm Celent. “If Visa can shorten the hold time, then why not?”
Visa's plan, which was announced on Thursday, would also require gas stations to limit the amount they hold to what the average gas purchase is at each station. Consumers can currently avoid the hold by paying with a debit card inside a gas station or by using cash.
Visa's move is a big step toward helping the cash-strapped consumer, said Gillen.
He said recent pressure from consumers and media outlets has had a hand in the company's new plan.
The Consumers Union, an independent consumer rights organization, called upon MasterCard to follow suit following Visa's announcement last week, the organization's staff attorney Michelle Jun said.
Gillen said he doesn't believe it will be too long before MasterCard adopts a similar plan.
“They will have to do this,” Gillen said. “It's starting to really, really hurt.”