Why do I have a charge on my credit card account, when the purchase failed?

Why do I have a charge on my credit card account, when the purchase failed?

SUMMARY

Sometimes when an order is declined, you might see an entry on your credit card account when you view account activity on your bank's Web site.  However, if the order was declined then it's very likely that you are seeing a temporary authorization rather than an actual charge, and you will never be charged for or have to pay the authorization amount.

MORE INFORMATION

"Honor with identification" responses

Banks that issue credit cards will sometimes respond to a transaction request with a conditional authorization or approval, such as "honor with identification".  This type of authorization means that the merchant is allowed to accept the order and process the transaction, but ONLY if the merchant can first physically verify the customer's identification documents.  Banks usually give this response for the cardholder's own protection - they want to make sure that the customer placing the order is actually the cardholder and not someone who might have stolen the credit card.

When an "honor with identification" response is received, the bank might create a temporary authorization on the credit card account, because they are approving the transaction for face-to-face transactions.  Since online orders placed via an eSellerate Web Store are obviously not being done face-to-face, eSellerate is unable to verify the customer's identification.  We are therefore required to decline the transaction.  But the authorization that was created by the bank may remain on the account for a while.

"Invalid CSC or expiration date" responses

Another common cause of pending authorizations on the credit card account is when the card's issuing bank responds to the initial transaction request with a message indicating that the credit card's security code (CSC) or expiration date has been entered incorrectly.  For most types of cards, the issuing bank may choose to approve and authorize the transaction despite the mistake in the CSC or expiration date.  However, when the eSellerate system receives that warning from the bank that the CSC or expiration date has been entered incorrectly, the transaction will be declined by eSellerate even though the card's issuing bank has authorized it.  This is done for the protection of the cardholder and for eSellerate's protection against fraudulent charges.

When the bank authorizes a transaction with a warning that the CSC or expiration date has been entered incorrectly and the transaction is declined by eSellerate, the original authorization may remain on the account temporarily.

What exactly is an authorization?

For many different types of credit card and debit card transactions, an authorization occurs before the actual purchase is processed.  Another common example can happen when you purchase gasoline and pay at the fuel pump by inserting your card.  If you check the account activity online shortly after the fuel purchase, you might notice a separate authorization (sometimes for a small amount such $1.00, and sometimes for much more - even $50.00).  The authorization happens when the filling station initially contacts the card's issuing bank to make sure there are sufficient funds available for any likely fuel purchase amount.

These authorizations can have the temporary effect of reducing the available balance for the account, but they will automatically expire and drop off the account eventually.  The duration for which an authorization remains on the account varies by issuing bank or card type, and cannot be controlled by eSellerate.

Important:  These authorizations are NOT charges.  The cardholder will never be billed or have to pay those amounts.  These items will also never appear on the cardholder's credit card statements - for most banks or card types, they can only be seen or noticed  by viewing the account activity online or calling the card's customer service number.

What to do when you see a transaction on your credit card account for a failed order

Many banks' Web sites make a distinction between authorizations and actual charges.  Double-check the entire item you're seeing - not just the description and the amount.  Is there a heading, column or grouping that includes the word "pending" or "authorization"?  If you see either of those words next to the item in question, you can know for sure that you're seeing an authorization rather than a charge.  Furthermore, for any authorization from eSellerate (whose description begins with "DRI" or sometimes "ES"), if the order failed, you can be sure that the authorization will NEVER be captured (that is, converted to an actual charge).

If your bank's Web site does not include an indication of "pending" or "authorization" and you're not sure, please call the customer service number on the back of the card, and speak to a live representative.  Ask the bank's representative to confirm for you that you are seeing a pending authorization, and not a captured charge.  The representative should also be able to tell you how soon the authorization - which was created by the bank, not by eSellerate - will expire and drop off the account permanently.

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Topic Information
  • Topic #: 5570-297
  • Date Created: 10/09/2008
  • Last Modified Since: 10/16/2009
  • Viewed: 56218
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