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Why Do Credit Card Transactions Go Into A Pending State Rather Than Approved? | All Credit Card Payments

Credit card processes are pretty complicated, and without proper knowledge, they can give you some unwanted worries. If you know about the terms and functions, then you would not worry a lot. The most confusing time is ‘Pending’ charges; it will show even if the amount is deducted from your account, so that it can be quite problematic, so one should have proper knowledge about it.

What is the pending status?

Pending status, as the name shows, is a ‘pending’ word shown on your account. It is a transaction that is yet to be paid. This transaction is approved, but it does not show in your account. There are several reasons why a pending status is shown, but if you see the pending status, it means it is on ‘hold.’ The money is reserved; it is taken from your account, but the transaction is not completed yet. Whenever you purchase something, the status is shown pending because the merchant does not process the purchase.

Usually, whenever you purchase, processing takes over 24 hours, or it is processed overnight, so it shows the pending status and is not approved immediately? But if it takes more than a day, then the merchant or the retailer has not processed the transaction.  The money is deducted from your account, but they will never complete the transaction under the merchant process. If the merchant does not process it and doesn’t take the money for seven days, the transaction is canceled, and they will transfer the money back to your account. This sort of transaction is authorized, but it is not processed means the issuer has posted the transaction, but the merchant has to process it. Otherwise, it will be on pending status.

Why is it on pending status?

There are multiple causes for a pending transaction. If you see a pending status after purchase, then there is nothing to worry about.

Firstly the transaction takes 24 hours to be completed so that the pending status will be there for at least 24 hours. The transaction is processed overnight, and it is not completed within one day. It does not get approved right away because several details need to be matched by the computer software. The money from your balance is deducted, but the purchase is not completed yet. The money removed from your account is reserved to reach the merchant only when they approve it, and the transaction is processed. Sometimes a transaction process event is supported by a merchant takes two days because the whole processing is done overnight. Unfortunately, if there is some error in the software, it will take more than a day.

Some merchants don’t process the transaction, and then pending status appears. It is because, in some cases, merchants request another authorization to check that you have available funds or not. Even if you have funds available but to satisfy themselves, the merchant request another appointment. Due to this, you will see two charges in your account one is the authorized amount and the other one is the final amount. No need to worry when you see this; you will not be charged two times. Both will disappear when the issuer removes it from your account once the processing is finished.

Hotels, car bookings also have pending charges. Whenever you book something, the hotels will charge you some amount before checking in the hotel. For example, they will charge you $120 in advance. Even if you are not using that card for payment, they will deduct the amount from your account. Once this happens, a pending status will appear in your account, and your bank balance will be removed. Once you stay in the hotel and checkout and pay the hotel charges with another card or cash, this pending status will disappear, and the hotel will return the amount that people took. The same goes for restaurant reservations and car bookings. They charge you a certain amount before even entertaining you to be on the safe side, and when you pay them back, they stop the transaction and return the deducted amount.

The processing is also pending on weekends because there is a bank holiday on the weekend. After the authorization process, a settlement process requires a human element to work on it. As this process already takes 24 hours with the weekend, the transaction will take 4 to 5 days to change the status from pending to complete. For example, if you purchased on Friday night, the transaction will be completed by Tuesday morning and sent to the merchant in batches.

Pending status is also necessary because, in a pending transaction, it means that it is being processed and it is passing some stages where all the details are matched. The process takes many days because if the transaction was started by a hacker or by a thief, then the issuing bank and payment gateway can check and save you from an unfortunate incident of credit card theft. The hackers, through phishing attacks, spam links, spam messages, send all types of viruses in your phone, can have access to your credit card details and can monitor your screens 24 by 7, and can make a purchase. If the transactions are approved right away, then the payment gateway, issuing bank, and acquiring bank won’t have time to check the details. Even if in these five days, if you didn’t make the purchase or notice some suspicious in the account, then you can report it immediately. The investment made is from the available funds and not from the account balance, so the money is not taken from your actual account balance in a pending state.

One reason why the credit card transaction does not get approved is that whenever you make a purchase, a merchant has to check whether you have money. So they can only check the available fund’s slot on your account and not the natural account balance. If there were no pending process, then the acquiring bank would be able to see your account balance.

Usually, the pending status appears for a long time when you make an order in bulk. If the amount is enormous, it will take time to process it to confirm the purchase, the bank will check again. They will ask for some additional documents as well. So the process will take longer than usual.

They go into the pending state because there is an authorization or pre-auto step. The credit card or merchant can’t keep you waiting for days to process payment, so they deduct the amount beforehand. This step is the confirmation by issuing bank that a customer has available funds in the account. As I mentioned before, the whole process is very complicated and takes place in many stages. We think that it reaches immediately to the merchant account, but that is only shown on the charges. The truth is when you make a purchase, the details will be received by a payment processor. A payment processor is a bridge between a customer’s issuing bank and the merchant’s acquiring bank.

The payment processor then sends it to the issuing bank to check and take your account’s funds. The issuing bank will now transfer the money to the merchant’sBankk. Which is sent to the merchant bank account in the form of batches after confirmation by the merchant? It is the authorization or pre-auto step. Of course, you cannot wait for this whole time, so they take the money from your account and give it a pending status. The entire transaction is completed in the waiting time, and the issuing bank removes the pending status.

The bank has to settle the transaction, and they have to check all the details during the processing time. It is seriously taken because now credit card companies provide a liability. For example, you notice an unrecognized transaction, and some thief did this. If by chance, the bank approves the transaction without checking correctly, then the bank has to pay for the loss. So they take time for processing to make sure that all the details are correct and the actual customer starts the transaction. It is why they put up a pending status.

Can you cancel a pending charge?

Pending status shows that the amount is not paid to the merchant, but we can take the money back. When it is a pending status, we are on hold, and the amount is deducted from our account by our issuing bank. But the issuing bank will never allow the customer to cancel a pending charge. If you have some dispute with the merchant or the product, you can negotiate with the merchant. Only the merchant can ask the issuing bank to cancel a transaction made by the customer. Otherwise, the issuing bank does not entertain such disputes. Once you have paid for the product, the issuing bank will only remove the pending status from your account once it has reached the merchant’, s account, but it will never cancel the payment unless the merchant asks them to cancel it.

How long can payment be pending?

Usually, a pending payment lasts for 5 or 7 days; this is the average time for a transaction to be fully completed. It all depends on the merchant; maybe a small business likes to request again for authorization step. Perhaps the merchant does not trust the source; for example, someone purchased colossal order, so they would want to recheck. Some businesses also approve the transaction once they start the shipment of the product. So all of this takes 5-6 days. It takes more time if the merchant has any problems. Most banks offer a time of 30 days to post the transaction on your account; if the payment is still pending, then the order is most likely to be canceled by the bank, and they will send back the money to your account.

Who is responsible when I cancel my credit card while it is pending?

When you have a pending status on your account, the issuing bank will not be allowed to cancel your card. Until you have some balance in your account, you cannot cancel the card according to your own will. You cannot cancel it until all the pending statuses change into completed and all the payments are posted on your account. Only an issuing bank can voluntarily cancel your account, which is a rare case. The issuing bank will only compensate the card if there is something wrong with your payments or maybe in the case of theft. But even if they cancel the card, you are still liable for the loss. You still have to pay for everything, so balancing a card will not help.

 

How can a pending status affect my balance?

Pending transactions are the money taken from your account but not yet posted and are under processing for at least a day or might take 3-5 days. Credit card accounts have to balances. One is known as the available funds, and the other one is the account balance. The money deducted for pending funds is taken from the public funds as the pending charges are only accepted from available funds of your account, so it will only affect the general fund balance.

For example, the purchase you made is $30, so the amount required for the transaction is only taken from available funds in the credit card. Even in the authorization step, the merchant can only verify the funds available in ‘available funds.’ They cannot see the whole amount present on your credit card and have no access to the account balance. The only source of verification in the pre-authorization step is the available funds. So, whenever you make a transaction, the money is taken first from the public funds, and then when it is completed, it is taken from the account balance.

However, besides the effect on available funds, there is no effect on the amount balance in the period of pending charges. The money for the transaction is not taken from the account balance, so it does not affect it. The money is taken from the account balance is when the transaction is completed, and it is posted on the account. If by chance, the transaction is canceled by the merchant or the bank, then they will add a refund in the available funds and not the account balance. The money taken from the account balance is the money for the entire purchase when it is done.

Will I be charged interest when my credit card show pending status?

The money taken for the initial purchase is from the available balance and not the account balance. Interests are only charged on money that is present in the account balance. If there is some theft problem, then the credit card liability policy will deal with it and will not charge you for the interest on money lost while in pending status.

Conclusion:

Pending status is not something to worry about. It is shown when you make a transaction, and your trades have to pass several stages before your issuing bank posts the payment on your account. All the time is taken, and all these stages ensure that the transaction is safe and both the merchant and customer do not become a victim of any theft or scam.

 A pending status can last for 3-5 days; if it lasts for more, you can ask the issuing or merchant to recheck it. The issuing bank will remove the pending status once the merchant has approved the payment process. The transaction status will change from pending status to completed when the merchant either clicks on the agree-on option or sends the shipment.

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