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I have a question regarding the provider of a following service. User A gets his money blocked/'frozen' until an event A or B occurs.

In case event A has occurred (after a particular time-frame, not immediately, e.g. a couple of days), then money goes back to user's bank account.

In case event B has occurred (after a particular time-frame, not immediately e.g. a couple of days), then money goes to a different account.

You can imagine a typical rental car deposit. When you rent the car, you get e.g. $1000 as deposit away from your credit card balance. The amount is 'frozen'/blocked virtually until you return the car and it is examined for damage. You can receive the amount blocked in full or you can receive less or nothing in case of expensive damage.

What exactly is happening here? Is there a service for 'freezing'/blocking amounts of one's credit card depending on future event occurrence?

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    I believe this is called an "authorization". Oct 10, 2016 at 13:55
  • I edited this to make it more on topic. If this changed your intent too much feel free to edit to clarify.
    – enderland
    Oct 10, 2016 at 14:14

2 Answers 2

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The way that credit card transactions happen are:

  • Authorization. Initially, the vendor says "can I charge X?" and the credit card company says yes or no.
  • Batching. Just because something is authorized doesn't make it happen. A good example is your auto rental (or restaurant transactions with tips, or gas station purchases). You will often see pending charges that are not actually real for any of these. They stay pending because the retailer never finalizes the transaction
  • Clearing/funding. This isn't relevant here, since the transactions never get here, but this is the part of the process where money actually is cleared and transferred to complete the transaction.

In your example, the card is authorized for the charge but the transaction never actually moves on to the next step.

However, your available credit should drop by whatever the authorized amount is and this will not disappear until it naturally goes away when the transaction does not move onto the next step.

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  • Hotels do the same thing, of course.
    – keshlam
    Oct 10, 2016 at 17:09
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There is no special activity type (or provider) for this situation.

Depending on the car rental agency, it is either a normal charge, and they later return the charge as necessary; or it is a normal authorization (like in a restaurant) that does never get confirmed (so it falls off the credit card after about three days).

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    "Three days" is not accurate necessarily; that's up to the issuer (and up to state law in some cases). Can be from 1 to 30 days for credit purchases.
    – Joe
    Oct 10, 2016 at 16:08

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