Pay at Pump

There has been quite a lot of misinformation floating around in the last few days about the change to pay at pump charging. I hope this helps clear some of the confusion up.

Until October last year the UK had specific rules for pay at pump machines that were different to the rest of Europe. In October last year both Visa and Mastercard changed the UK rules to align them with the rest of Europe.

The old rules

• The pay at pump machine authorises £1.
• The machine will then allow you to pump up to £100 of fuel.
• The petrol station will then collect this money via a presentment (typically the next business day).

Under these rules it is possible to spend money that you do not have and go into unauthorised overdraft. This is undesirable and generally out of line with how payment systems should work. As a result most banks have blocked pay at pump transactions for basic bank accounts.

The new rules

• The machine attempts to authorise the maximum amount that it wishes to allow the customer to pump (typically £99 or £100).
• If the customer doesn’t have enough money the bank issues a partial approval for what they do have.
• The machine lets the customer pump whatever was authorised
• Within 20 minutes the machine sends an auth advice to the bank telling them how much was pumped which allows them to release any excess hold on the card.

Under these rules:

• Someone can still use pay at pump if they have less than £99 in their account
• Excess holds are released within 20 mins (and usually almost instantly)

What’s the issue

Not all banks support partial approvals or auth advices. As a result, petrol stations are reluctant to comply with the new rules. Petrol stations that don’t comply with the new rules are liable for all fraud so they have a strong incentive to start complying.

What’s probably going to happen

Mastercard and Visa will tell the banks off and threaten them with fines if they don’t support partial approvals and auth advices. Once enough of the banks implement support, the petrol stations will switch over.