From time to time we receive calls from customers who attempt to place an order online and their credit cards are declined for one or more reasons - but their bank accounts will show that the charge is pending for several days. When we search our payment gateway here at Medelita, we will only see that the transaction has been declined.
If this happened to you, your credit/debit card charge has been declined from our perspective. However, based on the way many banks operate, the charge(s) may be pending for several days. The money will never be taken out of your credit card account but the reserve will be put aside so it will reduce your credit limit until the transaction clears on it's own within 2-5 business days.
Unfortunately we cannot remove the charge, nor can we call in on your behalf as the credit card companies will not share account information with non-account holders such as the merchant.
Here's a detailed description of how credit card transactions are processed online that will help explain this phenomenon:
1. When you place an order, the credit card transaction goes to the payment gateway provider such as Authorize.Net and forwards the transaction to Merchant Bank's Processor.
2. The information is then sent to your bank ("issuing bank"), and your bank will either approve or decline the transaction based on your available funds. If the transaction is declined by your bank, the transaction ends and your bank account will show the transaction as declined and so does the merchant's processor.
3. If the transaction is approved by your bank, it goes through a second security check by the payment gateway company with the billing information sent by the issuing bank. If the address, zip code and card code you provided do not match with the credit card billing information provided by the issuing bank, the payment gateway may decline the transaction based upon the merchant's fraud security settings. This is the reason why your bank indicates the transaction is approved, and the merchant indicates otherwise. Your bank approved the transaction, but the payment processor declined the transaction.
The net result of transaction status is a failure as the payment processor declined the transaction even though your bank had approved it. This transaction will NOT show up on your credit card statement as it is declined by the payment processor. To your bank, they'll see this transaction as approved and will temporarily hold ("reserve") this money until the payment processor claims the money (which will never do as it declined the transaction), or a specific time elapses with no action from the payment processor which then releases the reserve. The time it will take to release the fund varies from banks to banks, and it could take anywhere from 2-5 business days.
The reason for multiple "approved" transactions on your bank account may be due to multiple attempts on your part to submit the order when the payment processor declined the previous transaction.
Why would payment gateway company scan a security check and then decline the transaction when the issuing bank already approved the transaction? It is important to understand that credit card fraud is one of the fastest growing crimes worldwide, as more and more people are buying products and services online. When fraud occurs, the banks get their money back from the merchant and customers get their money back from the banks (sometimes with a bit of a hassle). It is the merchant who will lose money on fraudulent transactions. To protect merchants and buyers, payment gateway providers implemented this additional security check to prevent "possible" fraud.
Note: Portions of this article were reproduced/rewritten from Scott Seong's article, which contains a graphic respresentation of how this works here here: http://www.webtrafficexchange.com/declined-credit-card-transaction-appear-approved-bank