ATF Explainer for card/contactless use at 24/7 Pay at Pump Forecourts.
Pre-authorisation at pay-at-pump petrol stations is a process used to ensure that customers have sufficient funds or a valid payment method to cover the cost of the fuel they are about to purchase.
This practice helps the station avoid the risk of unpaid transactions and protects both the station and the customer.
Reasons for Pre-Authorisation at Pay-at-Pump Stations:
1. Ensure Sufficient Funds:
o The pre-authorisation process checks if the payment card (debit, credit, or prepaid) has enough available funds to cover the cost of the fuel.
o A temporary hold (usually for a larger amount than the fuel purchase) is placed on the customer’s card. This amount may be more than the expected fuel cost to allow for fluctuations in the final amount.
2. Prevent Fraud and Chargebacks:
o By pre-authorising the payment, the petrol station can verify that the card being used is valid and that the customer has access to the funds, reducing the risk of fraudulent transactions.
o If the transaction is flagged as potentially fraudulent, the pre-authorisation can be cancelled, and the customer can be asked to use a different payment method.
3. Cover for Fuel Variations:
o Since customers might not know exactly how much fuel they will purchase (depending on the tank size, fuel price, and vehicle), the pre-authorisation amount typically covers a larger range.
o Once the fuel dispensing is complete, the final amount is charged, and the hold is adjusted to match the actual transaction.
4. Reduce the Risk of Drive-offs:
o Without pre-authorisation, there would be no guarantee that the customer would pay for the fuel after pumping. Pre-authorisation ensures that even if the customer drives off without completing the payment, the station has already secured the funds.
5. Quick and Efficient Transactions:
o The pre-authorisation step allows the transaction to be completed faster at the pump since the station doesn’t need to wait for full payment clearance.
o Once the fuel dispensing is finished, the final payment can be processed with minimal delays, usually 3-4 seconds.
How Pre-Authorisation Works:
• When a customer swipes or inserts their card at the pay-at-pump terminal, the system contacts the bank or payment processor.
• The processor verifies the card details, checks if there are sufficient funds, and places a temporary hold on the card for a pre-determined amount, typically a little more than the estimated cost of a full tank.
• If the customer pumps less fuel than expected, the system adjusts the hold to reflect the actual fuel cost, and the final charge is made.
• If the hold is higher than the final transaction, the remaining funds are released after a short period, usually a few business days. This time is dependent on the specific bank/credit card you have used. It is not in ATFs control.