Hi, Sunday, September 14, 2003, 10:52:51 PM, you wrote:
>> This is also true from the charging point-of-view. The seller >> will debit your account only after the goods are despatched, >> not before. However, when you placed your order the card will >> have been authorised and your 'open to spend' figure reduced, >> awaiting confirmation of the sale, or some time for it to lapse. > Erm, no! I have NEVER seen a seller who doesn't take payment before > goods are despatched. What if payment cannot be met? Authorisation > does not GUARANTEE payment. Fair enough, they may try to leave it as > late as possiblye prior to despatch, but they wont ever release the > goods until payment has been made. Credit and debit card transactions are transactions with several parts. If we ignore mail-order for the moment and do something like a supermarket, here's what happens. You take the goods to the till, and give them your card to pay with. Normally the till software will dial the card issuer and get an auth code for the amount specified. That authorisation is in effect for a certain period of time - some days, usually. The merchant can make use of it quite a long time after the amount was authorised. The credit card company has flagged that amount of money as reserved and, in essence, unavailable to you, because they're expecting a later settlement request from the merchant. You can't touch that money until the 'unsettled authorisation' period has elapsed, even though your account hasn't been debited. Later, normally overnight, the merchant will get all this stuff out of the tills and send a settlement file to the card issuer. By this time you're long gone, you legally own the goods, and you've probably eaten them all. But the merchant hasn't had any money yet. What it has is a guarantee that the card issuer will pay that money. It's then the card issuer's job to get the money off you. When the card issuer receives the settlement file it will debit your account, provided the authorisation has not lapsed, and you'll see that on your next bill. In the case of mail-order, if the thing you want is on back-order then the merchant will get the authorisation from your card, but they won't do the settlement until they've sent the goods to you. The delay in getting the goods may, and often does, mean the authorisation has lapsed by the time they arrive in the warehose. In this case the merchant will get a 2nd authorisation, using the original transaction number, on the off-chance that you've still got enough credit left. This is true often enough to be a viable way of doing business. If you don't have enough credit, then, depending on what deal the card issuer and the merchant have done, they may still authorise the charge, or they may still debit your account when the settlement file comes through. You might then query the charge, in which case the card issuer will make a chargeback against the merchant, which means they will withhold that amount when they settle up. It is now up to the merchant to try and recover the money directly from you. If you're old enough, cast your mind back to the days when they handled credit card transactions with paper vouchers and those imprinting things - still used when the tills go down, or the authorisation server falls over. They work in precisely the same way, only the delays are even longer and there's more chance of them getting lost and you not getting charged. -- Cheers, Bob mailto:[EMAIL PROTECTED]
