Card pre-authorisations at hotels
 

Has it become customary for hotels not to cancel the pre-authorisations that hotels obtain after making a payment now?

Non-cancellation seems to be worse when paying on a card other than the one presented upon check-in, but I often have literally thousands of Euro on my accounts in pre-authorisation that hasn't been cancelled (so they become 'blocked amount'), and frequently they sit there for 30 days before they disappear.

When I ask the hotel to cancel the pre-authorisation after payment, most of the tell me that they would cancel out automatically in 4-5 days but they never do - they almost always take 30 days. They almost never do anything about it if I ask them to manually cancel them.

It's becoming quite annoying, although I do not need to access those blocked amount, because it sometimes gives me a fight by reducing the available balance without my expecting it.

Is this a widespread problem, or are the hotels that I have recently stayed at being a bit incompetent?

I am also annoyed by this practice and it seems to be happening with more frequency. During my most recent hotel stay in AMS, I was told that the charge would "automatically drop off within 24 hours." It took nearly a week.

Mine generally drop off within about 3 to 4 days. But I don't really notice much because if the pre-authorization is there at the beginning of my trip, by the end of the trip it is gone. So I kind of change one with the other, real charge for the pre-authorization. It has never taken longer that 4 days though.

I never notice because the stupid banks keep increasing my credit limit so I always have more than I need. I had to laugh, though, when I checked into a Walt Disney World property for a quick trip (in Saturday PM, business meeting followed by business dinner Sunday, out Monday AM, no accompanying persons). The guy at the desk gave me my "passport" and grandly announced that I could charge up to $1,500 to my room account. (Translation: if you added in the cost of the stay itself they'd put a hold of about $2,000 on my credit card.) Like that was gonna happen.

I don't get into any kind of stifle with this practice because I have quite a lot of cards with high credit limits, but it's annoying because online banking shows a totally skewed 'available balance' or 'available credit' because of it, and most of my online banking systems do not show what the culprits are. It causes me to feel concerned that my cards may have been compromised by a criminal.

I've finally started using a specific card for pre-authorisation which I know for the fact its online baking shows the details of pre-authorisations, so that I no longer need to worry that my card is getting abused.

I have never had a hotel cancel its pre-auth. Ever.

That's because it's not possible to do so.

Well, almost.

With MasterCard, Discover, and American Express, an authorization is a one-way process. The merchant can request the authorization, but once that money is held, the merchant can't make any modifications to the authorization or do anything other than submit a payment request against that authorization. The only way to void or reverse an authorization is for the merchant to contact the issuing bank directly and request it to be removed. This is a fairly labor-intensive process: the merchant has no central number to call for this, so he or she must get the number off of the back of your card. Then, the requirements are different for every bank: some banks will take the merchant's request over the phone (perhaps after verifying the merchant's bank number, merchant number, and the authorization code and dollar amount), and other banks require a faxed note on company letterhead. Some banks won't reverse it no matter how you ask them, and (most frustratingly) some banks won't even talk to you via the number on the back of the card if you're not the cardholder and can't provide the cardholder's SSN and other verifying information, so it's kinda hard for the merchant to do this without the cardholder calling the bank in front of him or her and getting past that.

Visa's systems are a little more advanced. SOME (not all!) POS systems allow the merchant to perform what is called an authorization reversal directly through the POS device or software. However, even among those POS systems that allow this, I think most cashiers/clerks/CSRs aren't even aware of what it is and may not even fully understand the difference between a payment and an authorization, so I doubt you'd get much help from them if you ask them to void the authorization.

I was in hotel management for 10 years, and spent 10 years installing hotel software. Jackel's analysis is spot on.

Another issue is the actual credit card interface the hotels are using. In the US we are accostumed to everything being in one system. You check in, I swipe your card, and the hotel system manages the authorizations from then on. If you stay extra, there is another authorization. When you check out, the system matches all the authorizations, applies a payment, and sends all that to the credit card company in near real time.

Outside North America, I have noticed many hotels check you in, then go over to a separate machine and swipe your card, generating a paper authorization that they staple to your record (called a folio). This may be a symptom of still using dial up for the interface, as opposed to broadband, near real time that most US hotels use, or it may be just that's how we've always done it, there's no reason to change.

You stay extra, or have a £200 meal, and a human has to manually get more authorized. You check out and I swipe your card again, and manually match an authorization to the charge. Or not, and voila, you have an auth or two sitting out there waiting to fall off.

They tend to sit there for 30 days before they disappear. I don't know if the US banking system (where I assume you are) than those in Europe and Australia, but once they're there, I've never seen them disappear before 30 days (but never beyond 30 days either - 30 days seem to be the cut off). Sometimes I have 10+ pre-authorisations from the previous 30 days amounting to many thousands of Euros sitting there.

Exactly. You can't combine authorizations. (Well, almost--with Visa, some POS systems--again, not all!--allow you to do what's called an incremental authorization, which allows the merchant to increase the amount of the original authorization, but it can't always be done and of course only works with Visa.) So when your charges are settled at the end of your stay or rental, the system picks one authorization and applies the charges against that. (And if your charges are more than any one authorization and the merchant can't do an incremental authorization to make up the difference, the merchant can either manually do several smaller charges and use up your existing authorizations or--what is more likely--just run a new authorization for the lump sum and ignore the old ones.)

Even among the broadband-based credit card modules built in to some POS software, there's room for agent error or confusion. (For example, the one I work with requires the agent to manually select the previous authorization, which often results in none getting selected.) A well-designed software suite (which ours is not!) will work well, but unfortunately, most niche market software companies simply don't have the resources to design a good UI and do good human factors design (even the majors like Apple and Microsoft get it wrong all the time, and they have thousands of people working on getting that stuff done right!).

Oh, one other complicating factor: different card-issuing banks hold authorizations for differing lengths of time. Some (as evidenced in this thread) stick for 3-4 days and others won't go away for a full month. Debit cards are usually on the shorter end (which is one of many reasons why many hotels and rental car companies refuse to use them or require additional qualification steps). So for some people, reversing an authorization at the end of a stay is redundant, because after a five-night stay, any unclaimed authorizations may have disappeared anyway. (I believe the merchant agreements with the various acquirers and other institutions involved in credit card transactions [it's WAY more complicated than you'd think!] allow a merchant to submit payment against an authorization up to 30 days after the authorization was requested, even if the authorization has appeared to fall off and the charge would cause the cardholder to go over his or her limit.)

Really, the whole credit card system needs an overhaul from the ground up. The PIN-based ("online") networks are a good start, since both authorizations and fund transfers happen in real time and don't go through as many steps, but they aren't feasible for hotels, rental agencies, online merchants, and other merchants who need the ability to run card-not-present (and cardholder-not-present) transactions or need to perform incremental charges for things like extensions, mini-bar charges, and vehicle damages--but that's a whole 'nother ball o' wax! :D

I think the practice is more annoying at car rental agencies, where larger blocks disappear.

What happens if you "pre-pay" for your entire stay when you check-in?

I remember doing this once and they had no problem with it.

I even asked them to do the pre-authorizations for any incidentals onto another credit card (one that I don't use often and don't anticipate needing to use during my trip).

What bothers me more than not releasing an authorization is charging OUTSIDE of the authorization. On my first vacation ever with my wife I had a hotel AND rental car company (both near LAX) place their final charges outside of the authorizations they had placed. This essentially left ~250% of the total charges residing on my card and caused me to have to make daily payments in the later legs of our trip to avoid bumping up against my credit line.