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If a person is in the habit of controlling transactions with his card account (it is more convenient to do this in the Internet bank), then he probably paid attention to the fact that after paying with the card, the corresponding amount is not debited from the account, but one or several days is reserved (frozen) by the bank. Moreover, the amount of the available balance on the card is reduced by exactly the frozen amount. Such a temporarily blocked amount is called in banking terminology "bank card hold", and the operation of its reservation is called holding. In this article, we will tell you in simple words what holding is and how long it takes to completely remove the hold. We will also analyze some of the nuances that arise in the process of this banking operation.
Bank card hold (holding). What it is?
Card hold (from the English verb to hold, literally meaning “to hold”) is a temporary reservation of the transaction amount on the client's card account until the transaction is confirmed or there is no confirmation within the time frame set by the bank.
In professional language, such an operation is called holding, and among cardholders such synonyms of this term as: reservation, freezing, reservation, blocking, etc. are common. It will be more correct if you use each of these synonyms together with the initial word: temporary. You can call this process whatever you like, the essence does not change.
The overwhelming majority of cardholders believe (or do not even think about it) that after they paid with a card through a pos-terminal in a store, the money was immediately debited from their card account. In reality, the fact of payment is only the beginning of a set of transactions (checks), which are collectively called a bank card transaction. It involves the acquiring bank servicing the outlet (he owns the pos-terminal), the issuing bank that issued the card, and the most important intermediate link - the international payment system (IPS), which connects the aforementioned banks into one "chain". You can familiarize yourself with all the main operations that take place during a transaction using the above link.
It is thanks to the IPS that a person can pay for his plastic anywhere in the world, the main thing is that the equipment in the store works with the MPS of your card. The most famous of the MPS: Visa and MasterCard. The final result of all these operations, they are also called authorization - obtaining permission from the issuing bank to pay by card. As soon as permission from the issuer is received, payment takes place and at the same moment the amount of the transaction is reserved on your card.
Why is this amount not debited immediately? It's all about the interaction algorithm of all banks participating in the transaction and the payment system. As a rule, information on all card payments in a merchant (merchant) is sent to the acquiring bank at the end of the working day, and on the basis of the information received, the acquirer generates so-called clearing files (files for debiting - financial confirmation of transactions), which through the payment system goes to the issuing bank. And only after that the issuer writes off money from accounts, i.e. the existence of the hold ceases.
If the financial confirmation of the transaction has not been received by the issuing bank, then after a certain (set by the bank) time the hold is automatically removed, - the funds are unfrozen and again become available to the cardholder.
In fact, the holding period depends on the time it takes to carry out the described "accounting entries", and its maximum duration is 30 days in accordance with the current legislation and the rules. Banks set holding periods of no more than 30 days, usually from 7 to 15 days.
As we have already said, in most cases, the consumer, after making a purchase, considers the payment to be an event that has already taken place, but there are also unpleasant situations in which the client has to face the concept of holding closely.
Holding pitfalls
In accordance with the rules of payment systems, the bank is obliged to write off according to the details that were indicated in the clearing files received by it. In the event that they do not coincide with the authorization details, the card is debited not at the expense of the hold. Thus, the payment was debited and the funds remained blocked. And the client, when requesting the balance, sees the balance minus both amounts. The problem is solved only over time, when the blocked amount does not find its confirmation and is automatically unfrozen.
A bad situation may arise if the issuer is late in receiving clearing files. The hold on the card has already been removed, but upon receipt of the details for debiting, the bank conducts an expense transaction on the card. With an insufficient amount of funds on the account, the balance will go into minus, that is, a technical (unauthorized) overdraft will appear.
Often, problems with frozen funds arise through the fault of cashiers or service personnel. For example, a cashier error can result in a double charge when a payment authorization request has been made twice, resulting in a double blocking of the transaction amount.
But the common situation with hotel reservations (cars, etc.). At the time of booking, the organization blocks a certain amount of prepayment for its services, and at the final settlement, the staff makes a new write-off. It remains to wait until this amount is automatically unlocked, which is not always convenient for the cardholder (it may simply not be enough money for life).
When booking, in order not to get into such situations, it is convenient to use not debit, but credit cards. In this case, you are not holding your own funds, but the bank's money. At the same time, the bank will not take interest on the frozen funds - they will automatically be returned to the account.
You should be especially careful when paying for purchases abroad or in foreign online stores. The fact is that the conversion of currencies does not take place on the day the funds are reserved, but on the date of their actual write-off - a few days later. How the exchange rate will change during this time is a big question. This means that after debiting on the card, there is a possibility of a technical overdraft, for which you will have to pay at the existing rates.
In addition, it is not recommended to change the card account if the frozen amounts are "stuck" on it. Indeed, in this situation, it is impossible to say for sure on which of the two accounts the actual write-off will occur - this is the prerogative. Wait until the hold is canceled.
Any cardholder should be aware that he cannot influence the cancellation of the hold or its accelerated unblocking in any way. The holding is canceled either after the actual debit transaction or when the authorization is canceled by the outlet. Therefore, be careful and accurate in matters of payment!
- 1. Hold on a bank card (holding). What it is?
- 2. Pitfalls of holding
If a person is in the habit of controlling transactions with his card account (it is more convenient to do this in the Internet bank), then he probably paid attention to the fact that after paying with the card, the corresponding amount is not debited from the account, but one or several days is reserved (frozen) by the bank. Moreover, the amount of the available balance on the card is reduced by exactly the frozen amount. Such a temporarily blocked amount is called in banking terminology "bank card hold", and the operation of its reservation is called holding. In this article, we will tell you in simple words what holding is and how long it takes to completely remove the hold. We will also analyze some of the nuances that arise in the process of this banking operation.
Bank card hold (holding). What it is?
Card hold (from the English verb to hold, literally meaning “to hold”) is a temporary reservation of the transaction amount on the client's card account until the transaction is confirmed or there is no confirmation within the time frame set by the bank.
In professional language, such an operation is called holding, and among cardholders such synonyms of this term as: reservation, freezing, reservation, blocking, etc. are common. It will be more correct if you use each of these synonyms together with the initial word: temporary. You can call this process whatever you like, the essence does not change.
The overwhelming majority of cardholders believe (or do not even think about it) that after they paid with a card through a pos-terminal in a store, the money was immediately debited from their card account. In reality, the fact of payment is only the beginning of a set of transactions (checks), which are collectively called a bank card transaction. It involves the acquiring bank servicing the outlet (he owns the pos-terminal), the issuing bank that issued the card, and the most important intermediate link - the international payment system (IPS), which connects the aforementioned banks into one "chain". You can familiarize yourself with all the main operations that take place during a transaction using the above link.
It is thanks to the IPS that a person can pay for his plastic anywhere in the world, the main thing is that the equipment in the store works with the MPS of your card. The most famous of the MPS: Visa and MasterCard. The final result of all these operations, they are also called authorization - obtaining permission from the issuing bank to pay by card. As soon as permission from the issuer is received, payment takes place and at the same moment the amount of the transaction is reserved on your card.
Why is this amount not debited immediately? It's all about the interaction algorithm of all banks participating in the transaction and the payment system. As a rule, information on all card payments in a merchant (merchant) is sent to the acquiring bank at the end of the working day, and on the basis of the information received, the acquirer generates so-called clearing files (files for debiting - financial confirmation of transactions), which through the payment system goes to the issuing bank. And only after that the issuer writes off money from accounts, i.e. the existence of the hold ceases.
If the financial confirmation of the transaction has not been received by the issuing bank, then after a certain (set by the bank) time the hold is automatically removed, - the funds are unfrozen and again become available to the cardholder.
In fact, the holding period depends on the time it takes to carry out the described "accounting entries", and its maximum duration is 30 days in accordance with the current legislation and the rules. Banks set holding periods of no more than 30 days, usually from 7 to 15 days.
As we have already said, in most cases, the consumer, after making a purchase, considers the payment to be an event that has already taken place, but there are also unpleasant situations in which the client has to face the concept of holding closely.
Holding pitfalls
In accordance with the rules of payment systems, the bank is obliged to write off according to the details that were indicated in the clearing files received by it. In the event that they do not coincide with the authorization details, the card is debited not at the expense of the hold. Thus, the payment was debited and the funds remained blocked. And the client, when requesting the balance, sees the balance minus both amounts. The problem is solved only over time, when the blocked amount does not find its confirmation and is automatically unfrozen.
A bad situation may arise if the issuer is late in receiving clearing files. The hold on the card has already been removed, but upon receipt of the details for debiting, the bank conducts an expense transaction on the card. With an insufficient amount of funds on the account, the balance will go into minus, that is, a technical (unauthorized) overdraft will appear.
Often, problems with frozen funds arise through the fault of cashiers or service personnel. For example, a cashier error can result in a double charge when a payment authorization request has been made twice, resulting in a double blocking of the transaction amount.
But the common situation with hotel reservations (cars, etc.). At the time of booking, the organization blocks a certain amount of prepayment for its services, and at the final settlement, the staff makes a new write-off. It remains to wait until this amount is automatically unlocked, which is not always convenient for the cardholder (it may simply not be enough money for life).
When booking, in order not to get into such situations, it is convenient to use not debit, but credit cards. In this case, you are not holding your own funds, but the bank's money. At the same time, the bank will not take interest on the frozen funds - they will automatically be returned to the account.
You should be especially careful when paying for purchases abroad or in foreign online stores. The fact is that the conversion of currencies does not take place on the day the funds are reserved, but on the date of their actual write-off - a few days later. How the exchange rate will change during this time is a big question. This means that after debiting on the card, there is a possibility of a technical overdraft, for which you will have to pay at the existing rates.
In addition, it is not recommended to change the card account if the frozen amounts are "stuck" on it. Indeed, in this situation, it is impossible to say for sure on which of the two accounts the actual write-off will occur - this is the prerogative. Wait until the hold is canceled.
Any cardholder should be aware that he cannot influence the cancellation of the hold or its accelerated unblocking in any way. The holding is canceled either after the actual debit transaction or when the authorization is canceled by the outlet. Therefore, be careful and accurate in matters of payment!
