Transaction Expired?

April 30, 2007 7:39 PM

Should I be worried about this transaction? [more inside]

On 4/21 I purchased a virtual visa card at www.www-card.com with a Commerce Bank check card. The virtual visa was activated and used completely without issue. Commerce's website showed a pending transaction for the correct amount but then it was removed today from the pending transactions (and nothing got posted to the history). No money was deducted from my account. I called Commerce and asked them about it and they said that the funds "expired" for the merchant because they did not take it. I asked if this could somehow bite me later on and he said no since the money was available to them but they did not get it in time.

Should I be worried that mobsters are going to show up at my house demanding payment with the juice running?

posted by ngn01 to work & money (19 comments total)

Call the merchant and ask them what the story is.
posted by LobsterMitten at 7:47 PM on April 30, 2007

What kind of timeline are we talking about here? How much time did Commerce give them to get the funds?
posted by jayder at 7:49 PM on April 30, 2007

Well, obviously, the answer is "not much" time, since you bought the thing on 4/21.

This sounds very shady. It sounds like Commerce is trying to screw merchants. Did you buy something online, or at a brick-and-mortar business?
posted by jayder at 7:50 PM on April 30, 2007

jayder: How would it benefit Commerce not to transfer the funds? Do they even get to take their fee in that case?

ngn01 (take the following with a grain of salt): If your bank has assured you they won't be giving the money out, I think you can rest easy, though you should be prepared to be contacted by www.www-card.com, since they're likely to notice that they didn't collect your payment. If they don't notice, I'd say it's up to you whether or not to contact them and bring the issue to their attention yourself. I don't think you could be held legally responsible for anything; the problem (if any) is between Commerce and the vendor.

Even assuming www.www-card.com is shady, I don't see what they could stand to gain by letting the availability of the funds expire, and I don't think they'd have reason to do anything but contact you and ask politely when they realize they failed to collect your payment. If they do try to come after you with scare tactics and trumped-up "late fees" (the only angle I can think of,) call bullshit. As for whether you still legally owe them the original money: I'll have to leave that to the people who have some idea what they're talking about. The important thing is that you've got a paper trail clearly showing that you attempted to pay them the correct amount, and they didn't take it. Ball's in their court.

If it does turn out they're trying to scam you somehow, I'd love to hear how it works.
posted by contraption at 8:30 PM on April 30, 2007

Its normal for an authorization to be placed on an account for a purchase. It often happens with gas. You merchant is authorized to deduct X amount of money but can not do so until the card company recieves proof of the transaction. This also happens with airline tickets. I believe the normal time ranges from 3-7 days for the merchant to privde the required documents (paper or electronic) to thus recieve the funds. I've never had the time expire before the funds where gone but my airline tickets did take up to the very last moment once. I'm not sure if the merchant has a way of dealing with this is they do not follow due course fast enough. However I am rather confident that their aggreement with the card company hold them responsible and not you in the event. Sounds like you got a free purchase. Though that doesn't mean they might not all you and try to get you to submit payment again.
posted by crewshell at 8:31 PM on April 30, 2007

Did they tell you what merchant it was? What did you use the card for? There are two types of credit card transactions AUTHs and CAPs. An AUTH is just an authorization to see if you have enough credit to make a transaction. If an AUTH isn't followed by a corresponding CAP (capture) within a few days, it expires. For example, when you pay at the pump, most gas stations make an AUTH for $35 the moment you swipe your card and then after you finish, they send in a CAP for the actual amount. At restaurants when you give them your card, they do an AUTH for the bill + 20%, and when you actually mark a tip, they CAP that amount.

All of that to say that I wouldn't worry about it.
posted by AaRdVarK at 8:32 PM on April 30, 2007

Preview is my friend, we just aren't speaking at the moment.

You = Your, hold = holds, all = call
posted by crewshell at 8:34 PM on April 30, 2007

For the record, if a restaurant gets an authorization for more than the bill, they're violating their merchant agreement, same as if they have purchase minimums or maximums. It's not as if they need to authorize the bill plus some to add on a tip, anyway.

The merchant in question can get the money even if the original authorization expired.
posted by wierdo at 8:45 PM on April 30, 2007

jayder: Well I "bought" something online. The card was used for gaming, the online variety. I used the card fully in one shot.

contraption: I don't really have a paper trail since I was not emailed anything and now that the transaction has been removed from Commerce, there is nothing there to indicate a transaction took place.
posted by ngn01 at 8:47 PM on April 30, 2007

I don't know the technical aspects of the credit card business, but recently we had fraudulent activity on our Visa check card. One transaction was "pending" for several days, but the merchant didn't complete the transaction, so it expired. That uncompleted charge disappeared completely off our account, and even the bank said there was no record of it after a few days.

The other transaction was pending for five days before it went from "pending" to "posted" and was drawn from our account. Even knowing it was fraudulent, Visa paid it when the merchant completed the request. Apparently they are obligated to pay once they have approved a request, hence the "pending" category.

Five to six days seems to be the maximum for the bank to hold open an accoung for a merchant to complete payment. So, as far as I understand it, the error would be from whoever you used the card to purchase from. If they are legit, I'm sure they will get back to you to re-initiate the payment.

On preview, I have no idea why an online gaming company would let the transaction expire. You probably haven't heard the last from them.
posted by rintj at 8:54 PM on April 30, 2007

More info:

1. I've done the same thing at giftcards.com and a discovercard without an issue.

2. I was on a bad run and have a few more of these www-card.com transactions pending.
posted by ngn01 at 8:56 PM on April 30, 2007

rintj: I'm not worried about the gaming company but more so the virtual visa card seller (I've called them the "merchant" in my above posts) since they are the ones that did not receive payment from the bank.
posted by ngn01 at 8:58 PM on April 30, 2007

I've had that happen with lots of stuff I buy online from merchants like American Airlines and Apple Computer. There will be a hold placed on the account on the day I make the purchase. After a few days that hold drops off and it looks like I got a free computer. A few more days later the charge shows up again as posted for the original amount.

Nothing sinister or unscrupulous. Just make sure you don't go spend that money while the debit is in limbo.
posted by birdherder at 9:01 PM on April 30, 2007

jayder: How would it benefit Commerce not to transfer the funds? Do they even get to take their fee in that case?

Uh, that's a good point, I guess I am not sure how these cards work.

I thought that a virtual credit card is kind of like a department store gift card. Merchants love to sell gift cards because a large percentage of them that are never used to purchase anything, so it's free money for the merchant.

I was thinking that, if you buy a virtual credit card, whoever sells you the card hopes you will not use it --- so they can keep the money. If the card-seller places strict time limits on how long merchants have to collect funds due to them, the card-seller may be able to end up keeping the funds even if you have actually purchased something.

Am I incorrect in my understanding of how these virtual credit cards work?
posted by jayder at 9:22 PM on April 30, 2007

Sorry, I didn't understand exactly who didn't complete their transaction, thanks for the clarification. Even if the online Visa card seller didn't take any money from your account, I am guessing that you still don't have to worry (except to make sure you don't spend the money they WILL be back to take). If your bank approved them for pending status once, they will probably do it again.

Unless the virtual card is a scam. But even then, as contraption said, I don't see how the Visa merchant gains anything by not taking money from your account.
posted by rintj at 10:06 PM on April 30, 2007

Are you sure that the card was not "free" from the get go? Perhaps there was some sort of promotion going on?

In light of the fact that you maxed it out the first time you used it, I have to say that you are the ideal customer.
posted by bkeene12 at 5:18 AM on May 1, 2007

Disregard above post. Obviously they didn't give you a free night of gambling on the house.
posted by bkeene12 at 5:32 AM on May 1, 2007

Here's the short answer, the long answer follows it.

Short answer: I opened up the live help window for my account at authorize.net and asked this:

Brandon W: Hello Phearlez! How can I help you today?
Phearlez: I'm trying to figure out - if I get an authorization number from the virtual terminal, how long do I have to run it as a capture before it "expires" ?
Brandon W: An Authorization will expire after 30 days.
Phearlez: is that a setting for me or just an industry thing?
Brandon W: It is the industry standard.

So that money might disappear from your account anytime between now and 5/21.

Long answer:

Your bank is confusing their internal policy for fund holding with how long a credit authorization is valid.

When someone charges your card there's actually a 3-step process. Steps 1 and 2 often happen together. Step one is authorization, which is when a merchant queries the lending bank (via a clearinghouse like authorize.net) if they approve the charge. If you're old enough to remember before electronic processing this is when the merchant would pick up the phone, read the cc number and other details off and get a code from the operator which they would then write down on the slip. That authorization is an agreement from the credit card company to pay the merchant when they submit the slip.

You could submit the slip without pre-authorization but the CC company might say "nope" and not pay. There used to be (and maybe there still are) agreements from the CC company that amounts under a certain threshold like $50 were implicitly authorized.

Step two is called capture, when that promise is converted into payment. When the web application I wrote for a certain government four-letter-agency takes a registration payment for a conference attendee it actually does the authorization and capture in a single step, but it doesn't have to. When I use the virtual terminal at authorize.net to manually charge an attendee I have the option to

• authorize&capture, which puts it in the queue to pay me
  
• authorize, which merely gives me an auth code
  
• capture, which requires me to enter into it (see this coming?) a previously provided auth code.
  

It's possible that the people you bought the prepaid card from have a system set up where they do an initial authorization but don't capture the transaction till they issue you the number. My application doesn't have to worry about that since what I am delivering is permission to sit in a seat. They, on the other hand, could have you bitching if they charge you but some glitch prevents them from giving you the card number to use. A two-stage process would allow them to head off some objections/problems. I don't know if that's the reason they do it - or even if that's how they do it at all - but that's the best explanation I can come up with.

In the old days of paper processing companies would gather up their slips and submit them in a bundle, as often as they liked and/or were allowed to. Now we don't have that situation, as card slips are often just as backups in case of a challenge. My account at authorize.net automatically does a batch at the end of the day which submits my charges for payment, though that is a default setting I can change. I could only batch once a week if I so desired, or I could code my app to batch after every transaction (I think - haven't checked since I would never do this, but I know I can call it programatically).

The main reason not to do this is that once the batch is run I forfeit my 1-4% processing fee if I have to issue a refund. Before that point I can just cancel the transaction at no cost (or maybe the $0.25 transaction fee still applies - I'm not sure since it's not really an issue for me)

Now, after all that, to the real point. Debit cards mess the whole situation up for everyone. It used to be you were speaking of purely theoretical money. You'd been vetted as a reasonable credit risk and if you charged something they'd bill you for it. The risk of you not having the money to pay was built into your interest rate and other things and if you managed to make a bunch of authorizations that pushed you over your credit limit, well, there was probably a fee for that too, but everyone probably got paid.

Now with debit they have to encumber that money in your account, and they need to decide how long they're going to do that. Since companies get authorizations for all kinds of reasons, like car rental companies and other places doing rentals, they want to compromise between making sure they don't prevent you from REALLY spending the money (since they make their money as a percentage on a captured transaction, not from unsubmitted auths) or pisse you off.

On the other hand, they are obligated to pay that company if they gave them an authorization and if they unencumber that money and you spend it elsewhere they are now in the situation where they have to come after you for it, and in a potentially weaker position than if you were a credit card customer.

So, they come up with an arbitrary medium which, to the best of my knowledge, is NOT an industry standard. After a week in your case, they simply drop that auth from visibility in your online banking and play the odds that something not batched up in a week won't be batched at all.

Different companies indicate things differently online. My bank, USAA, differentiates between pending transactions and processed ones. My darling girlfriend's bank, Chevy Chase, showed no distinction the last time I was lookin over her shoulder, about 8 months ago.

The real moral is, if you use a debit card, keep a decent cushion in your account.
posted by phearlez at 10:51 AM on May 1, 2007

Just to close the loop on this, the money was eventually taken out on 5/15, so a delay of 3 weeks or so.
posted by ngn01 at 5:30 PM on May 20, 2007