Need to know
- Woolworths has been rolling out its 'post pick pay' system over the last three years
- It applies a pending estimated charge and then the actual charge once your groceries have been picked
- Woolies says the pending charge should be released at the same time the actual charge goes through, but customers and banks say that's not always the case
Having a business dip into your bank account and put funds on hold without your permission is always a little unnerving.
They might call it a pending authorisation charge, an estimated charge or something similar.
It's not an unusual occurrence when making a hotel or rental car booking, or with other areas of discretionary spending. But when the unexpected charge is for essentials like groceries, you have to wonder if the business has the right to do that.
And when a pending authorisation causes an overdraw in your account, the experience can go from unnerving to infuriating.
Estimated charges 'jammed up for seven days'
That's how Kat felt when Woolworths applied an estimated charge of $171 for her online grocery shopping, then a second actual charge of $138.
"My account ended up in negative available balance," says Kat. "I got in touch with Woolworths via their chat service and was told that I had been moved to the post pick pay system."
The Woolworths rep explained that the 'post pick pay' system puts the estimated amount through as a pending transaction first, then that's converted to the final charge after the actual shopping takes place.
They moved me onto this system without notifying or asking me
Woolworths customer Kat
According to Woolworths, the customer's bank is supposed to match the authorisation code so the two charges are part of the same transaction, which may not have happened in Kat's case.
In other words, the $171 was supposed to be released as soon as the $138 was taken out.
The two amounts can be different when items are out of stock and substituted or in the case of fresh produce sold by weight, since the exact charge wouldn't be known until checkout.
Kat was told via chat that the pending amount – or estimated charge – would be back in her account in up to seven days.
Under the old system, customers like Kat would pay the full amount and be reimbursed for any items that were out of stock in a few days.
The Woolworths rep told Kat she could be removed from the post pick pay system, an offer she readily accepted.
"But they moved me onto this system without notifying or asking me. So basically my bank account was jammed up for $171 for seven days," says Kat.
Woolworths: 'It's out of our control'
CHOICE got in touch with Woolworths and were told the system works as customer service had explained, but the spokesperson didn't mention the possible seven-day wait to have the pending transaction, or estimated charge, released.
According to the Woolworths spokesperson, the estimated charge should be refunded as soon as the actual charge goes through.
There may be some instances where the card issuing bank hasn't applied the correct matching rules to immediately release the pending authorisation
Woolworths spokesperson
"The card-issuing bank, under scheme rules, is expected to release the pending authorisation amount immediately at that time," the spokesperson says.
But then came the disclaimer: "There may be some instances where the card issuing bank hasn't applied the correct matching rules to immediately release the pending authorisation, which is out of Woolworths Group's control."
The spokesperson said Woolworths has been transitioning customers to the post pick pay system over the last three years.
Woolies say your pending charge should be released immediately when the actual charge goes through, but how long it takes depends on your bank.
Banks say charges could take days to revert
We asked Woolworths which scheme rules they were referring to, but the company declined to respond to the question.
They also didn't respond to our question about whether customers could be removed from the post pick pay system.
CHOICE is not aware of a single mandatory rule applying to all banks saying pending charges must be released as soon as the merchant cancels them.
The Australian Securities and Investments Commission's e-payments code, for instance, does not contain such a clause.
Commonwealth Bank, on the other hand, says pending transaction charges can take up to seven days to revert to available balance in an account.
Delays could be caused by a number of factors between the merchant, card scheme and bank
Westpac (Bank of Melbourne) spokesperson
In general, the protocol for pending charges – or matching authorisation codes to release funds – can vary from bank to bank.
We contacted Kat's bank, Bank of Melbourne (owned by Westpac), and asked if the bank's failure to apply the correct matching rules was the reason it took so long for Kat's pending charge to be released.
The bank didn't acknowledge the existence of any such rules but a spokesperson told us "the change of a transaction from pending to cleared in a customer's account usually takes place within one to two days of the transaction being made, but delays could be caused by a number of factors between the merchant, card scheme and bank".
In other words, the scheme rules the Woolies spokesperson described requiring banks to release pending authorisations at the same time the actual charge goes through apparently don't apply to Westpac or its subsidiary Bank of Melbourne.
Problems opting out
Since Woolworths began rolling out the new system, the company "has only received a handful of complaints," the spokesperson says, reiterating that "it is up to the card-issuing bank to release the pending authorisation".
That's not good enough for Kat, who shops online because she doesn't own a car.
Despite being told she would be removed from the system, a $100 estimated charge was applied the next time she shopped.
"This time it interfered with getting medication I need. Apparently there was some system glitch and my request to be taken off the system wasn't processed."
Woolworths says the advantage of its post pick pay system is that customers no longer have to wait a few days to be reimbursed for items they paid for but didn't receive.
Kat takes a different view. "The system is stupid and I can't believe any idiot over there thought this was one worth implementing."
Woolworths says customers experiencing a delay in an estimated charge being released should contact customer service – or their bank.
(Editor's note: 'Kat' is a pseudonym.)
Stock images: Getty, unless otherwise stated.
