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Old Jul 17, 12, 3:34 pm   #1
 
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One dollar charges on CC

I've recently noticed that every time I make a payment to UA I get an initial $1.00 charge on my CC, followed by the real charge and a removal of the first $1 transaction.

I'm not in the habit of scouring my CC statements hour by hour, but I don't remember seeing these from UA in the past.

Another SHARES enhancement we'll like? I'm pretty sure the old UA just put the charge through. Are they really doing a dollar ding to be sure the card is valid??
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Old Jul 17, 12, 3:36 pm   #2
 
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No, a lot of companies do the $1.00 charge to make sure the card is active; restaurants and gas stations do it too.
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Old Jul 17, 12, 3:39 pm   #3
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Originally Posted by Youngmiler View Post
No, a lot of companies do the $1.00 charge to authorize the card, restaurants do too.
It actually makes no sense for UA to do this in the context of processing a ticket purchase.

Apparently UA didn't do this before CO took them over according to OP's observations.

$1 auth only makes sense when necessary to validate a card that won't be charged right away. If PAX is purchasing a ticket, charge amount is known, so it should just be charged.

The real stupidity of this apparent new strategy is that COdabUA is now paying c/c processing and authorization fees twice: once for the $1 auth, then again for the separate charge transaction. This doubles their card authorization expense in terms of per-item fees.
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Old Jul 17, 12, 3:54 pm   #4
 
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Originally Posted by Youngmiler View Post
No, a lot of companies do the $1.00 charge to make sure the card is active; restaurants and gas stations do it too.
Restaurants do it since the total charge isn't known when they process your card - the put through something, I've seen a dollar but I've also seen the total of the bill before the tip, you then add a tip and sign, they later go back and process the final amount long after you're gone, so the first transaction largely checks the card is valid.

Gas stations are similar, they check your card before they let you start to pump gas. And these $1 charges look suspicious - Chase has cut me off multiple times due to $1 gas station dings.

With airline tickets, and virtually all online sites, the total is known before you hit Purchase, and there should be no reason the entire charge just can't be sent through in the first place. It the card isn't valid the system returns a rejection message and the transaction isn't completed.
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Old Jul 17, 12, 4:02 pm   #5
 
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Quote:
Originally Posted by mitchmu View Post
It actually makes no sense for UA to do this in the context of processing a ticket purchase.

Apparently UA didn't do this before CO took them over according to OP's observations.

$1 auth only makes sense when necessary to validate a card that won't be charged right away. If PAX is purchasing a ticket, charge amount is known, so it should just be charged.

The real stupidity of this apparent new strategy is that COdabUA is now paying c/c processing and authorization fees twice: once for the $1 auth, then again for the separate charge transaction. This doubles their card authorization expense in terms of per-item fees.
They are doing two separate transactions? I always thought restaurants and the like simply pre-authorized and then modified the amount so as to fit the tip. One fee, one transaction.


Either way, it makes no sense to pre-authorize something that is being purchased and can either not be given or taken back. If they cant charge, they just dont give you the merchandise (in this case a ticket). It would be like a cashier checking to make sure your card works before you pay for the groceries...
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Old Jul 17, 12, 4:14 pm   #6
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Originally Posted by gohima View Post
They are doing two separate transactions? I always thought restaurants and the like simply pre-authorized and then modified the amount so as to fit the tip. One fee, one transaction.


Either way, it makes no sense to pre-authorize something that is being purchased and can either not be given or taken back. If they cant charge, they just dont give you the merchandise (in this case a ticket). It would be like a cashier checking to make sure your card works before you pay for the groceries...
In the case of a restaurant, they should do an authorization for the amount of the meal, and then then should do a settlement against that authorization for the amount of the sale + the tip. It is still only 1 transaction. This is a special case that the card networks support specifically for restaurants or other businesses that have a legitimate need to construct transactions in this way.

In the case of UA, when they are processing a charge to purchase a ticket, they should just authorize and settle against the cost of the ticket. Doing a $1 authorization first makes no business sense. With all the money they're throwing away on authorization fees, maybe they could do a few less TOD's and then give me an upgrade once in a while.
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Old Jul 17, 12, 6:43 pm   #7
 
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Quote:
Originally Posted by mitchmu View Post
In the case of a restaurant, they should do an authorization for the amount of the meal, and then then should do a settlement against that authorization for the amount of the sale + the tip. It is still only 1 transaction. This is a special case that the card networks support specifically for restaurants or other businesses that have a legitimate need to construct transactions in this way.

In the case of UA, when they are processing a charge to purchase a ticket, they should just authorize and settle against the cost of the ticket. Doing a $1 authorization first makes no business sense. With all the money they're throwing away on authorization fees, maybe they could do a few less TOD's and then give me an upgrade once in a while.
Possibly a way to make additional money. Think about it they charge all tickets purchased that day a one dollar charge. They float the dollar for two days and earn interest on say 100,000 tickets. Then they charge the actuall ticket price of 500 bucks. Let's see 100k a day at 1% a year X 365 will yield them an extra 36k a year in profit.

This is the new United. Money first people last. Another scheme to boost the profit.

Last edited by iluv2fly; Jul 17, 12 at 6:57 pm. Reason: merge
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Old Jul 17, 12, 6:57 pm   #8
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Originally Posted by Bullpup View Post
Possibly a way to make additional money. Think about it they charge all tickets purchased that day a one dollar charge. They float the dollar for two days and earn interest on say 100,000 tickets. Then they charge the actuall ticket price of 500 bucks. Let's see 100k a day at 1% a year X 365 will yield them an extra 36k a year in profit.

This is the new United. Money first people last. Another scheme to boost the profit.
Wrong. UA sees the value of the ticket by COB. It neither makes nor loses money today that it didn't make before.

The use of the $1 test charge has become much more common-place across many sectors and despite the histrionics on FT, has zippo to do with SHARES or anything else.
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Old Jul 17, 12, 7:26 pm   #9
 
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Wrong. UA sees the value of the ticket by COB. It neither makes nor loses money today that it didn't make before.

The use of the $1 test charge has become much more common-place across many sectors and despite the histrionics on FT, has zippo to do with SHARES or anything else.
I am glad to hear that. Last week United hit new lows with my me when the carpet club would not change tickets do to weather delays and sent me back out through security to the main terminal to rebook.

Oh the good part. Since the main flight was going overseas and I already missed the connection the front terminal ticket counter rebooked me on the next nights flight. When I told him I needed the return date also pushed back one day he laughed saying it does not work that way. They can only get me on the next flight and could not push the return date back.

I am really happy this is not a money scheme as nothing surprises me anymore.
So thank you for making me feel a little better by letting me know I was mistaking.
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Old Jul 17, 12, 7:32 pm   #10
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Originally Posted by Bullpup View Post
Possibly a way to make additional money. Think about it they charge all tickets purchased that day a one dollar charge. They float the dollar for two days and earn interest on say 100,000 tickets. Then they charge the actuall ticket price of 500 bucks. Let's see 100k a day at 1% a year X 365 will yield them an extra 36k a year in profit.

This is the new United. Money first people last. Another scheme to boost the profit.
More likely it's an auth not a settle which means they never see cash and anyway fees would be higher than float.
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Old Jul 17, 12, 8:00 pm   #11
 
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Another factor I believe might be working here is the 24-hour cancellation policy. I've noticed that my actual tickets charges tend to appear after the 24 hour window. If they do the $1 charge first, that validates that the card is good and then after the 24 hour window the actual charge gets applied. That way then don't have to get into the Chargeback processing loop. Everybody hates chargebacks, both merchants and processors and anything to reduce those is probably saves $$ at both ends.

Cheers,
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Old Jul 17, 12, 8:34 pm   #12
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AA does $1 test all the time.

I am not sure the merchant has to pay authorization fee. I believe they only pay the fee with actual transaction. Authorization is not actual transaction.

Many business do $1 authorization to test if the card is a good one. Sometimes these $1 holds take a long time to fall off - annoying, but not harmful. So who cares.
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Old Jul 17, 12, 8:38 pm   #13
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Originally Posted by mitchmu View Post
It actually makes no sense for UA to do this in the context of processing a ticket purchase.
They auth when you purchase. They bulk process the actual purchases generally later. They do this to reduce their processing costs and improve systems performance as I understand it. If you leverage the 24 hour rule and cancel before they do the actual charge then they save money. And they don't lose any by processing a few hours after the purchase.
Quote:
Originally Posted by mitchmu View Post
The real stupidity of this apparent new strategy is that COdabUA is now paying c/c processing and authorization fees twice: once for the $1 auth, then again for the separate charge transaction. This doubles their card authorization expense in terms of per-item fees.
Do you have any evidence that they're actually paying double? I highly doubt that is actually the case.
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Old Jul 17, 12, 8:41 pm   #14
 
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I gather the $1 test charge is simply for United to make certain the card is valid, so this practice does not raise any major concerns.
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Old Jul 17, 12, 9:44 pm   #15
 
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I have my Chase cards set up to email alerts for:

1. More than ($ USD) is authorized on my credit card for a single transaction
2. An international charge is authorized on my credit card
3. An online, phone or mail charge is authorized on my credit card
4. A gas station charge is authorized on my credit card

The only $1 charges I ever got an email for was from ticket purchases on united.com.

When I purchase at a gas station, the email usually hits my phone within 1 minute, and often before I start the car and drive away. I've never seen a $1 charge from a gas station from my personal use.

Over the past years, my Chase card has been "duplicated" 3 or 4 times. With the alerts set up this way, last time I was able to notify chase and cancel the card within minutes of the first fraudulent use.
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