Authorization holds: why customers see pending charges

A customer calls on Monday, upset. They bought $40 of groceries Saturday, you voided the sale and rang it again, and now their bank app shows two charges. What they're seeing is an authorization hold. When a card is approved, the bank sets aside that amount right away, and it shows as pending until the sale settles or the hold expires.

This comes up at every store that takes cards. Knowing how holds work helps you calm the customer down and avoid causing extra ones.

What is an authorization hold, exactly?

An authorization hold is the bank reserving money for a sale before it's final. When you run a card, your processor asks the issuing bank to approve the amount. If the bank says yes, it marks that amount as unavailable in the customer's account or credit line.

The hold isn't the final charge. The final charge happens when you close your batch and the sale settles. At that point the pending item turns into a posted transaction.

Most of the time the customer never notices, because the hold and the final charge are the same amount and they happen close together.

Why does a customer see two charges after a void?

This is the most common complaint. You ring up a sale, catch a mistake, void it, and ring it again. The customer sees two pending charges.

Here's why. The void cancels the sale on your side, and your processor sends that cancellation along. But the customer's bank may not release the first hold right away. For a while, both show up as pending.

The good news is the voided one should never post. It drops off once the bank processes the release. How long that takes depends on the customer's bank, not on you or your processor.

The fix at the counter is to slow down before you press pay. Check the total with the customer first. Fewer voids mean fewer confused phone calls.

How long do holds last?

There isn't one answer. Each issuing bank sets its own timing for when an unused hold drops off. For a normal sale that you settle the same day, the hold usually turns into the final charge within a day or two.

For a void or a canceled sale, the release timing is up to the customer's bank. Some release quickly. Others let the hold sit for several days.

You can help by closing your batch every day. Sales that sit unsettled keep holds open longer and can cost you more in fees.

What should you tell a customer who calls?

Keep it simple and calm. Something like this works: "The first charge was canceled on our end. Your bank is holding it as pending, and it should drop off without posting. If it doesn't, call us back and we'll look at the receipt with you."

Then check your records. Pull up the void in your POS or batch report so you can confirm it went through. If the customer is still worried, give them the date, time, and amount so they can call their bank.

If you see voids causing problems often, it might be a training issue or a reader issue. Your NRS Pay support team is available seven days a week if you need help reading a transaction. And if you're shopping for a reader, you can compare card terminal options that work with the NRS POS.

One more habit helps: when you void a sale, tell the customer right away. A quick "I canceled that first charge, you may see it as pending for a bit" at the counter heads off most of the Monday phone calls. Customers mostly get upset when a pending charge surprises them, not when they were told about it.