Watch out with pre-authorizations!

#1

I want to share my experience here so other people won’t have the same bad surprise.

I’ve used my VISA Revolut card for pre-authorization in an hotel in Buenos Aires, Argentina. I needed to stay 6 days for business over there. After 4 days, I realized that the transaction had switched from “Pending” to “Completed”, so the money was gone for good. When paying for check-out, I asked if there was a mistake here. The manager said it was normal and a refund would be sent 2 weeks later.

…It never arrived. I contacted the Revolut Support = “You must contact the vendor to ask for refund, the transaction has been completed”. I contacted then the hotel = “We called VISA and checked our account, we don’t see anyhting”. It went on and on like in a ping pong game for a while and after 1 month and a half of pressure (Revolut did raise a dispute with the hotel actually), the manager came back to me and “realized” that the transaction shows up in his book on the fourth day of my stay, not the first day (not sure if he’s not lying here).

My point is that it’s possible than after a few days, because of technical glitch (pre-paid debit card weakness?) or human bad intent, the pre-authorized amount can be sucked out of your Revolut account without your consent.

Word to the wise: use your regular card for the pre-authorization, use your Revolut card for payment when leaving (or cash during the week-end CET time in a country with no possibility to add an account in your Revolut app)

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#2

I don’t believe this was a technical glitch.

Authorizations automatically expire with all cards (not specific to prepaid) when the merchant or its acquirer doesn’t present the authorized payment in time. That’s the process where the credit card network provider, Visa in your example, settles the actual payment and funds are actually transferred.

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#3

So that was not a pre-authorisation but actually a hotel security deposit.
Authorisations are usually the 1$/£/€… transactions that are performed to verify (mostly but not exclusively by websites) that the card used exists.

Personally I never use debit cards for deposits, always a credit card so my funds aren’t blocked.

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#4

It was an actual authorization. And a settlement/capture that should not have happened.

It sure is strange, but the real mistake was to pay again when he checked out. You should never pay things twice even if promised that they would eventually reverse one of the payments. Pay them for any additional services you’ve used and walk away.

Edit: And no, don’t use different cards. Use the same card for reservation (incl. authorization) and payment. They can settle the authorized transaction at any time without you knowing. It is much easier to detect and to dispute double payments if they appear on the same statement and doesn’t involve multiple issuers (which one is the correct transaction?).

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#5

I disagree with this advice.

Never use Revolut or any other prepaid card or debit card for security deposits for car hire or hotels etc. Always use a charge card or credit card with a robust and consumer-friendly disputes policy such as American Express. If the merchant subsequently turns the block on your card into a finalised transaction, then you can easily dispute the transaction by showing that you paid by an alternative means.

Use Revolut only for money that you intend to pay, never for blocking/authorising an amount as a deposit.

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#6

What if you don’t have any credit cards? :frowning:

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#7

Everyone should have a credit card, for various reasons:

  • Emergencies when spending money for which you expect to be reimbursed, so that you don’t have to spend your own money
  • Authorising/blocking security deposits
  • Earning points, airmiles etc when spending in one’s domestic currency
  • Creating a liability for the card issuer in case of the merchant’s breach of contract depending on the country of issue (e.g. Section 75 of the Consumer Credit Act 1974 in the UK). For example this would cover the cost of more expensive replacement flights if an airline goes bust, which Visa/MasterCard chargeback doesn’t cover.

Although some people have a poor credit history and therefore will be turned down for most credit cards, most people are eligible and should take advantage of them.

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#8

Which most people would fail to see because it is on different statements and people don’t have the time to cross-check transaction histories of multiple credit card issuers. If you are anal about your spendings and strictly follow consistent card usage patterns, fine. For everyone else, which means most people, this is just bad advice. Use the same card, you only have to miss one “mistake” and all the benefits/savings you ever got from Revolut are gone.

And again, it is always easy to dispute a double payment no matter the issuer. What you describe only matters when you are doing it wrong in the first place, i.e. authorize the same thing twice with different cards.

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#9

It’s the card issuer’s time, not the card holder’s time. There’s almost no work for the card holder except for providing the Revolut statement to the credit card issuer in the rare event that this happens.

So I maintain that this is good advice.

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#10

I got turned down for lack of a credit history paired with theoretically low income that’s beefed up by a student loan :joy: still got a mobile contract though

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#11

The issuer logs into your other issuer’s account to check whether that authorization was actually settled twice?

I think you are missing the point. The issuer doesn’t matter. The customer missing the scam/mistake is the problem. If you have two bookings for the same hotel on the same statement around the same date everyone is going to catch that. If you use different cards (depending on airmiles and cash back and currency conversion rates and whatnot) for all sorts of bookings and payments it is just more likely that related transactions appearing on multiple statements are overlooked.

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#12

A reasonable person checks every individual transaction on each of their bank and credit card accounts. Therefore a duplicate transaction would be quickly and easily identified, even the duplicates are across two accounts. For example, if a non-GBP transaction appeared on my American Express account, then it would stick out like a sore thumb, not least because of the 3% surcharge which is always itemised. I am suggesting that, for authorisation/blocking for hotels and car hire, i.e. transactions that they never intend to pay, travellers should use cards that are better suited for disputes rather than suited for transactions in non-domestic currencies.

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#13

That’s why I said, if you are such a person, fine for you, do it like this. But many people are not, and therefore it is bad general advice. Most people can easily overlook such things. In case of a double payment with the same issuer (and only this, I’m not talking about car hires etc.) the dispute is a clear-cut case and every issuer will reimburse you. This means that your method has zero benefits. But the disadvantage of having to spend more time with your card statements and cross-analyzing them which you would not have to do otherwise.

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#14

It’s not more time, but the same amount of time. A duplicate transaction will be identified during the normal diligent checking of account transactions.

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#15

By you. And by many others it won’t. Why do you think a whole business exists around credit ratings, because everyone is particularly good at handling money and “diligent checking of account transactions”? Related tansactions in different accounts are harder to spot than in the same account, period. And it is easier to dispute double payments in the same account, period. (yes, it might not be in your case, but we are not talking about you.)

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#16

@resolut, some of what you say is true. But I disagree that the advantages of using only one card do not outweigh the advantages of using a credit card for authorisations/blocking for hotels and car hire etc.

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#17

I totally agree with you on car hires, deposits, and everything that you are likely not going to pay or things that are somewhat likely to be disputed later. But I disagree on the hotel (unless an additional deposit is required) and other things that you are actually going to use and pay for.

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#18

I never suggested that the intended charge for a hotel or hire car should be charged to a credit card, only the authorisation/blocking/deposit.

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#19

Hi Daidai. Actually with many debit cards in France (such as the VISA PREMIER debit card), the funds aren’t blocked. It’s the case with the pre-paid debit cards (MASTERCARD MAESTRO or VISA ELECTRON for instance)

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#20

That’s because French banks have the concept of “une carte à débit différé”, whereby the funds are not debited until the end of the month.

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