Personal Finance & Money Asked by Dark Hippo on March 21, 2021
Pretty much what the title says.
I understand the need use for a pre-authorisation charge for certain services where a service or product is given before it is actually paid for (some hotels where you pay on checkout and pay at pump petrol in stations), but I recently had an interesting situation with the app of a parking company.
For various reasons, I didn’t trust the company with my credit card number, and the normal method of paying with cash was out of order, so I decided to use a virtual, disposable card number. This was subject to the pre-authorisation charge of 1p, and because of that charge, the card was disposed and a new card number generated. This meant that the actual parking charge failed, presumably due to an invalid card number (the actual error I received was "card declined").
After contacting the company about this, I was told it was for "security" reasons, which I find very hard to believe (a car parking charge is a one off payment, so surely there’s also no need to pre-verify the card number, it either works or it doesn’t, just like other online retailers).
So, in this instance, what is the purpose of a 1p pre-authorisation charge?
EDIT:
To answer a question in one of the comments, the car park was completely open, no gated entry of any sort (my solution upon being unable to pay was actually to go park on a side street a 30 second walk away for free).
For a car park, it is possible that you will leave your car there longer than the agreed upon time. They want to make sure they have the ability to charge you again if you do not remove your car.
Correct answer by Ben Miller - Remember Monica on March 21, 2021
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