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I have placed an order with an online store which preauthorises charges at 100% the price of the item. Now on my Visa Electron debit card I have a daily purchase limit of say x dollars. The purchase exceeded the limit by y dollars. I spoke with the bank to raise the limit enough to cover the $y purchase and the transaction must have been preauthorised successfully because I received a notification SMS from my bank.

My question is that since the limit will be lowered to $x within a few minutes, and the completion of the transaction will happen any time during the coming week, will the transaction definitely pass since it was preauthorised, or can it fail again due to the exceeded limit?

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OK, so I contacted the bank and after explaining the situation they told me that the limit does not matter now since the transaction was successful - the important thing is that the payment is taken by the merchant within 7 days. Let's hope they do so, I can't wait for my new iPhone!

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As you've found a pre-authorisation is binding.

Basically the merchant asked the vendor "If I were to post a transaction for $y dollars to Jurgen's account would you honour it" and the answer was "Yes, provided you do it within z days".

That's a binding promise - so long as the vendor posts the final transaction within the time limit it will be paid. If the time limit expires the transaction is cancelled and the vendor has to start from the beginning.

The corollary of that is that your bank has probably "ring-fenced" that money in your account to prevent you spending it elsewhere.

A friend of mine used to work for an online retailer and a few years ago, just before Christmas, they had an issue with their card processor which led to them posting repeated pre-authorisation requests for each credit card transaction until they exhausted the credit limit. Caused a bit of a fuss ...

  • Yeah that makes sense, it was the credit limit that got me all confused :) – Jurgen Camilleri Sep 17 '15 at 14:37

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