The Gift

I received a gift card and had an interesting experience. It really made me leery of working with gift cards and credit cards for that mater at mobile gas stations.

To be exact, I was given a $50 American express gift card.  The exact process went in the following manner:

Day 1

1) 7 AM in the morning, I made a purchase of $15 dollars in gas. Leaving a balance of $35

2)8 hours later I made a purchase of 2 slushees and a candy bar for my son with a total of 4.53 cent leaving a remaining balance of $30.47

Day 2

1) 7 AM in the morning, I made a purchase of $10.01 in gas, leaving a balance of $20.46.

2) I attempted to make a purchase at a nearby Food Lion with the gift card for $3, which was declined.

3) I attempted to go back to the same gas station which is where I purchased gas & the card was declined again for a $4.99 purchase at this facility.

What gives?

The Curse

So I called the gift card company.  The gave me the run down and a bit of a run around.  The basic gist it this:

a) Some machines that are at the gas pump put a hold on your funds.  This hold on YOUR FUNDS is not set in stone and is based upon the “machine” and “business”;

b) The business and the machine in this case can & will place a hold from $1 to $99, regardless of the size of the transaction;

c) The hold on your funds on your card will last anywhere from 2 to 8 days.

So the gist in this case is, a $10.01 transaction hold 30.47 in funds hostage for up to 8 days of float.

The Concern

With the uptick of virtual currency,  Its become common place for consumers to use other kinds of imgresprocesses to make payments.  In todays society, people use Paypal and Prepaid cards instead of cash all the time.  The challenge is when the funds used hold up funds being floated by the bank or financial institution to generate revenue in the mean time of the transaction being closed.

In this case, I purchased $10.01 worth of Gas.  The bank  (in this case American Express) held $30.47 for the transaction.  There are rules and regulations to prevent this type of activity for $15 and above with international business, but with this transaction it technically less than 15 even though they are holding up to $100. In so far as my prospected and the merchants perspective the transaction is complete. As far as the financial institution is concerned the merchant has 1 – 7 days to complete the transmittal of there proper authorization to secure the funds. Upon the merchants transmittal via the merchant account the financial institution has 2-8 days to complete the transaction.  So under this set of circumstances, the shortest amount of time it take for me to re-receive my gifted funds is 2 days.   That being said it can and certainly does sometimes take upwards of 8 days to clear with certain merchants and financial institutions.  What happen’s to the money in the meantime: the Float.

What is interesting is I’ve found banks are require to make the first $100 available to consumers when depositing, But they operates the inverse when it comes to prepaid, credit or debit cards for purchases of gas. In this case the float is to the financial institution for the benefit of the financial institution and neither the merchant or consumer.

How This Impact Mobile Apps

The benefit is if an organization like this gas station had a mobile app.  With Mobile Apps they float is minimized.  The fact remains the mobile market give consumers what they need faster and merchants what they need sooner as well. In fact, there is guidance for mobile apps that only store payment credentials for other accounts that are outside the rule.  At this time, the mobile app stores will allow you get get access to you gas and cash fast.  Otherwise you have to go to the store and walk into the counter and ensure the merchant only does the credit amount for the exact amount of the transaction.

Point… get a mobile business application strategy if you are a business owners. If you are a consumer, go in the store to use your credit card unless you can spare and extra $100 to lend to the financial institutions on a free freeze float. I prefer slushees myself.