Quote:
Originally Posted by widebody911
The Chevron by my office sticks me for $165
Here's my question: do they get interest or some other benefit, other than possible fraud prevention, from doing that?
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No, there are different stages of CC transactions.
Authorize and Capture.
In any transaction you first need to Authorize. Basically verifying the availability of and placing funds on hold/reserving them.
Next is Capture where the funds are actually transferred.
Auth/capture can happen at the same time, (really one immediately after the other) or you can auth a charge and not capture it for up to 30 days.
So if all they are doing is the auth part then they derive no monetary benefit.
It also does not make sense for them to capture $1.
Every transaction is subject to a fee, 10-20% and ~$0.20 per transaction, refunds count as a transaction. Rates depend on merchant volume. It's why some merchants have a minimum amount for CC transactions.
If they capture the $1 and then refund it they get hit with 2 transactions fees. They would actually lose ~$0.50 for every $1.