Due to how payment systems work, authorization is obtained for a transaction first. For a Not Onus transaction (where the card's issuing bank and the POS's acquiring bank are different), the system waits for the transaction to arrive through the clearing incoming file.
For a Not Onus transaction to be reflected in the card's current-period activity, it must have come in through clearing.
Transactions that have been authorized but do not arrive via the clearing file are held for a certain period (usually 1 week). If the transaction has not arrived through clearing by the end of the first week, it is set to Expired status.
When a transaction is updated to expired:
- Card limit equal to the transaction amount is released back.
- If reward points were used in the transaction, the points used are refunded to the card.
- If reward points were earned on the transaction, the earned points are reversed.
What does this mean for the cardholder?
When a transaction expires, the amount blocked during authorization is released back into the cardholder's limit. Cardholders usually notice this as “I made a purchase, but it doesn't show up on my statement” or “my limit was released.” However, this does not mean the transaction has been fully cancelled.
If the transaction arrives in clearing later
If an expired transaction is later sent to clearing by the merchant's bank, it is reflected on the cardholder's account again. In that case, the cardholder may see the charge on a later statement. For this reason, it should not be assumed that the debt for a transaction whose limit was released has disappeared for good.
Why might a transaction not arrive in clearing?
- The merchant not running its batch close, or running it late
- The transaction being cancelled by the merchant, but the cancellation message not reaching the bank
- No closing being done for pre-authorization transactions
- The transaction being missing from the clearing file due to a technical issue
Waiting period
The waiting period given as an example in this article can vary from bank to bank and by transaction type. For example, in sectors that use pre-authorization, such as hotels and car rentals, the waiting period may be set longer.
