Disappearing fees can confuse debit card users

BOULDER — Jane Hicks and her spouse enjoyed a lovely meal at the Cheesecake Factory in Boulder. She paid the tab using her Wells Fargo debit card. When she got home, Hicks wanted to check her bank statement so she went to the Wells Fargo Web site. Imagine her surprise when she discovered that according to the online statement, the Cheesecake Factory charge was $4 more than that on her receipt she had signed.

The next day Hicks went back to the Wells Fargo site to look at the statement. The $4 was gone, and the statement and her receipt matched.

Hicks had two questions:

What was that $4 all about? And what happened to the interest she should have been earning on her interest-bearing checking account?

Rusty Hogan, general manager of the Boulder Cheesecake Factory, said typically a debit or credit card is swiped at the restaurant before the patron adds a tip. During the authorization process the card is automatically debited or credited an additional amount in anticipation of a tip. ?I would imagine every other restaurant in the world does it,? Hogan said.

The practice is standard in the restaurant industry, said Patty White, a sales executive with the Denver office of Paymentech Inc., a credit card processing company. It’s called ?further provisions,? she said. ?You may add a coffee or a piece of dessert.?

?It’s fairly common to put a hold on a debit card to make sure you have enough in your account to cover the expense,? said John Hall, spokesman for the Washington, D.C.-based American Bankers Association.

Authorization prior to the user signing for the expense is practiced by merchants with tipping capabilities like restaurants, salons and spas, and merchants that may be liable for large tabs including hotels and rental car companies, he said.

Since authorizations are not actual payment, most merchants post the actual debit or credit amount quickly, White said. Once the charge or debit is posted by the merchant and paid by the bank, the authorization is dropped, and the user is only charged for the actual amount. Posting usually takes less than 24 hours, but it may take several days depending on the bank, White said.

Authorization of credit and debit card payments actually occurs in every transaction, White said, because ?we’re in a zero-floor-limit environment.? This means that, except for an individual’s credit or debit limit, there is essentially no limit to the amount that can be charged on a credit or debit card.

Back in the days of manual imprinting before fully electronic processing, different industries had different floor limits to protect merchants, she said. Restaurants typically had a floor limit of $25 while airlines had $500.

The wide use of credit and debit cards is a great boon to merchants, White said, because ?the authorization code provides certainty that the merchant will get paid.?

John Peterson, senior vice president of the Superior office of TransFirst LLC, a credit card processing company, was not surprised that Hicks was able to see the pending authorization on her online bank statement. ?It’s a service that’s available from some of the online services,? he said.

Wells Fargo spokeswoman Christie Drum said Hicks needn’t worry about losing interest on the $4 that seemed to go missing temporarily from her checking account. ?Pending transactions have no impact on interest because the money isn’t taken out of your account,? she said. ?You keep accruing interest until the actual request for payment is processed.?Contact Caron Schwartz Ellis at (303) 440-4950 or e-mail csellis@bcbr.com.

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