Supermarket giant Tesco faced scrutiny when a customer discovered they’d been charged £120 after filling up at a petrol station in Manchester.
The customer reportedly spent just £15 on petrol using a pay-at-pump machine but was shocked to find the extra charge on his account, which he claimed didn’t get refunded back into his account for over 12 hours.
And it seems many other motorists are concerned and angry over these high pre-authorisation fees, taking to Twitter to voice their frustration.
Motoring expert James Armstrong, CEO at Veygo, explains all there is to know about pay-at-pump charges, including who’s doing it, when it started and what to do if you haven’t got the funds in your bank account.
What is a pre-authorisation fee?
Despite the recent publicity, this isn’t a new process – it was established by digital payment providers Visa and Mastercard in 2021.
Previously retailers offering pay-at-pump facilities could charge a reserve fee of £1 for consumers using their service, but this was upped to £120 last year.
The idea behind reserving the money was designed to ensure all motorists buying fuel have enough money in their account to pay for it, safeguarding both petrol retailers and consumers.
How does it work?
As a motorist, you’re required to insert your card and enter your pin to pay before you begin re-fuelling – this is where a pre-authorisation message is sent to your bank to check you have sufficient funds to cover the bill.
Next, the bank will accept the retailer’s proposed amount or suggest a lower authorised amount depending on your available balance.
After you finish fuelling, your bank will be notified how much petrol you’ve used, which should release the excess funds back into your account. For example, if you spend £60 on petrol and get charged a £120 reserve fee, only £60 will be taken and your balance should automatically reflect that.
What if you don’t have enough money?
If you don’t have enough money in your account to be charged a fee as high as £120, your bank will send this information to the petrol pump and agree on a lower authorised amount.
Once this is agreed upon, your pump will cut out once it has reached the set limit – otherwise known as partial authorisation. Bad news if you’re planning a long trip.
What should I do if the funds aren’t released?
If done correctly, motorists should only see one charge on their account for the value of the fuel purchased.
However, some mobile banking apps may show the total pre-authorisation fee as a pending transaction and there might be a delay of up to 48 hours for the actual amount to show and be taken from your account.
It’s always best to contact your bank directly if you have any concerns regarding your account, as they can advise you.
Which retailers have pay-at-pump charges?
Visa and Mastercard have changed how pay-at-pump transactions are managed at all fuel retailers in the UK.
From 2021, supermarket chains Asda, Sainsbury‘s and Morrisons charge consumers a pre-authorised fee of up to £100 depending on their available funds.
However, deposits can vary, with fuel providers like BP charging customers up to £150 for a full tank and Shell offering a mobile fuel payment service at selected stations where customers can choose their maximum spend before filling up.
In June 2022, Tesco piloted the £120 deposit charge at selected petrol stations, expected to roll out across all locations in 2023.