Transaction Pending but Money Deducted: What Does That Mean?

Banks and financial institutions have their own language and terminology for communicating certain actions and transactions related to your bank account. One of these terms that is frequently misunderstood is a pending transaction.

If you diligently check your mobile banking app or online banking to get an up to date picture of your account balance, you may have seen the use of the term pending payment while money has been deducted from your account.

To understand a transaction pending but money deducted situation better, it is important to see what it is and why it happens. This article covers the potential reasons behind pending transactions and what you can do in such cases. Let’s explore deeper.

Why Is My Transaction Pending but Money Deducted?

Pending payments can happen when you pay with a debit card either in-person or online. What happens in such cases is that the bank has in essence “ringfenced” the funds from your current account to pay the merchant at a later date.

The typical reason why a bank deducts money from your account but you see the transaction as pending is because the bank carries out a set of security checks to ensure that the merchant’s payment request can be authenticated.

Other possible reasons why you may see this term appear in your banking app could be due to:

• Subscription payments: These payments, including direct debit,may be finalised on the same day each month. However, the authorisation for them may take place a few days earlier.
• Transactions that use pre-authorisation: Primarily used by hotels and car rental agencies, these merchants typically place a hold on the account holder’s funds to ensure there is a sufficient balance on the account and after a certain period or usage has passed, the funds are deducted from the cardholder’s current balance.
• Bank transfers: Bank transfers such as electronic funds transfers or wire transfers are often processed at a slower rate and may appear as pending on your account.
• ATM transactions: Whether you make cash withdrawals or cash deposits, these transactions also take longer to process.
• Online purchases: Some merchants may also ringfence certain funds in online purchases and only withdraw them from your account once they have shipped your items.

Overall, your bank or card issuer works with a payment processor, carrying out payment processing which may entail certain delays. As such, it is possible that you will see a transaction pending with money deducted from your account and this should, in most cases, not be a cause for concern.

Can a Pending Transaction Be Declined?

As mentioned already, a bank or financial institution will set aside the funds you have spent and mark the transaction as pending on your account. However, the question arises as to whether a pending transaction can be declined.

The answer in most cases is yes. That’s because you may either not have enough money in your account to cover the cost of the payment. However, another reason relates to a transaction that dips into your overdraft balance.

How Long Does a Pending Transaction Take to Clear?

If you are concerned about pending transactions, and you are wondering how long they will take to clear, the answer lies in your financial institution, the merchant, the value of the transaction, the available balance in your account and other factors.

If there are sufficient funds in your account, your issuing bank will cordon off the money until the payment is fully processed. This process can take anywhere from one business day and go up to seven business days or longer, depending on the bank in question.

Can You Refund a Pending Transaction?

Another often asked question when it comes to pending transactions is whether it can be refunded. In short, this can be a challenging task and will depend on both the merchant directly as well as on the financial institution that you bank with.

You should familiarise yourself with the merchant’s refund process to determine whether you are entitled to a refund and if so, what the terms and conditions of the refund are. On the other hand, a more drastic method of getting your money back is initiating a chargeback procedure.

This is when you request a return of your payment directly from your card issuer and not from the merchant. Just be aware that initiating a chargeback can have negative implications for your credit score and it is usually used as a last resort.

Does the Available Balance Include Pending Transactions?

If you are wondering whether the available funds or balance of your account includes pending transactions, the short version is that it does. Unlike a current balance, the available balance includes pending transactions such as pending payments and pending deposits.

Conclusion

The exact process of cordoning off card payments differs from bank to bank and merchant to merchant.

However, most payments that are marked as pending will see the banks receive an instruction to hold onto the funds, deduct them from your account and then release them to the merchant once certain security checks have been completed.

As a customer, it is worth keeping an eye on your accounts and pending payments to ensure that everything is in order. In certain cases, you can cancel the pending transaction type by requesting a refund or initiating a chargeback.

Just be certain that this is the action you really want to take and follow both the merchant’s rules for refunds and your financial institution’s requirements for chargebacks.

Frequently Asked Questions