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Pretty much what the title says.

I understand the need use for a pre-authorisation charge for certain services where a service or product is given before it is actually paid for (some hotels where you pay on checkout and pay at pump petrol in stations), but I recently had an interesting situation with the app of a parking company.

For various reasons, I didn't trust the company with my credit card number, and the normal method of paying with cash was out of order, so I decided to use a virtual, disposable card number. This was subject to the pre-authorisation charge of 1p, and because of that charge, the card was disposed and a new card number generated. This meant that the actual parking charge failed, presumably due to an invalid card number (the actual error I received was "card declined").

After contacting the company about this, I was told it was for "security" reasons, which I find very hard to believe (a car parking charge is a one off payment, so surely there's also no need to pre-verify the card number, it either works or it doesn't, just like other online retailers).

So, in this instance, what is the purpose of a 1p pre-authorisation charge?

EDIT:

To answer a question in one of the comments, the car park was completely open, no gated entry of any sort (my solution upon being unable to pay was actually to go park on a side street a 30 second walk away for free).

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5
  • In the US, gas stations usually authorize a large amount ($50 to $100) and then retroactively reduce it to the smaller amount when settling - as do hotels and rental car agencies, avoiding these $.01 charges. Does it not work that way in the UK?
    – Joe
    Jul 24, 2020 at 15:58
  • @Joe Yes, but, because I was using a disposable card, the transaction failed as the 1p pre-authorisation charge immediately caused the card to be disposed of. If I had known about the 1p charge (which they don't mention in their terms and conditions anywhere), I'd have used a different payment method (well, I'd have just sacked off the whole thing and gone elsewhere, which is what I did in the end)
    – Dark Hippo
    Jul 24, 2020 at 16:40
  • In the US that wouldn't be an issue because it would still be the same charge. IE, they don't make one authorization charge then a separate one, they make one charge and then amend it, which has to be possible - the card must exist until reconciliation at the end of the day. It sounds like they do something different, which might be UK/EU rules, or might just be their own thing - I only know US unfortunately. I'm guessing they do one authorization for 1p just to verify it, then do a second authorization for the full amount - perhaps they're not allowed to preauthorize a larger amount.
    – Joe
    Jul 24, 2020 at 16:41
  • @Joe That does make sense in the context of a much larger charge (car rental agency, etc), so I can see that, but there's not really much you can do with a 1p (or $.01) charge I would've thought, unless the same banking rules mean you can increase as well as decrease the pre-charge.
    – Dark Hippo
    Jul 24, 2020 at 16:44
  • In the US what I imagine would happen is that they would preauth one day's worth or something - well, really here they just don't worry about it because they can tow your car if you don't leave when you are supposed to, but still - they'd preauth an amount big enough to cover the possible bill.
    – Joe
    Jul 24, 2020 at 16:46

1 Answer 1

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For a car park, it is possible that you will leave your car there longer than the agreed upon time. They want to make sure they have the ability to charge you again if you do not remove your car.

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9
  • I would assume that, after paying, you use the app to open the gate as you drive out, meaning that the likelihood of you leaving your car parked is much the same as if you had paid cash, which doesn't give the car park operator a way to easily charge again. Perhaps Dark Hippo can edit their question to clarify.
    – dhag
    Jul 24, 2020 at 16:20
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    @dhag There was no gate on the car park, so no restrictions on entry or exit. Added to the question.
    – Dark Hippo
    Jul 24, 2020 at 16:41
  • I did think that this might be the reason, as the touted "security" reason just doesn't make sense to me. It's actually another reason I wanted to use a disposable card, because I've been caught like that before, being charged extra due to a car park attendant not reading the ticket in my windscreen properly.
    – Dark Hippo
    Jul 24, 2020 at 16:42
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    @DarkHippo - It'd be their security, not yours. Securing themselves against fake card numbers.
    – Bobson
    Jul 24, 2020 at 23:11
  • @Bobson Yep, I totally understand that, what I don't understand is why. Normal vendors don't have a problem with virtual, disposable credit cards and they all charge a one off payment to the card for whatever I'm buying. It should be the same with car parking, I'm paying you a one off payment to park there for however long I'm planning on staying, exactly the same as pumping pound coins into a machine to get a ticket.
    – Dark Hippo
    Jul 26, 2020 at 9:03

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