So you’ve recently done some shopping, but come home and see your account has way more transactions and less funds than you made purchases for. But then you remember that your card declined quite a few times during your shopping trip.
These extra transactions may only be pending charges that will reverse after a few days - even though they appear to be completed.
Although it may seem like paying with your credit or debit card is an instant process, it takes time behind the scenes to actually move the money from your bank account to its final destination.
When you make a purchase, you may find that the charge is pending for a few days, yet your balance still goes down. Some banks make this more visible than others.
There is a process in place for card payments where the issuer of your debit/credit card will first authorize or pre-authorize the transaction which sets aside the funds for the merchant to later deduct. Think of it like sending an email full of money. It is unlikely that the merchant is checking their email every second of every day, so it will wait in their inbox until they check it. Once they open the email, they will then decide to take or reject the money. While the mail sits in their inbox, you can consider it as “pending”. We set a timeframe for how long the transaction can stay “pending” or for our example, how long the merchant has to open their email - we will dive more into this later.
When the merchant opens their email and everything looks correct, the merchant will take or “capture” the funds. If the amount is not quite right, the merchant can adjust the amount they actually take out of the set aside funds and send the excess back to you. The merchant should not take more than what has been pre-authorized. Lastly if the merchant did not intend to take the funds at all due to an issue on their end, they will reject the funds. When this happens, the funds will no longer be “pending” and the money will be back in your balance.
As mentioned before, we as the issuer, make the timeframe decision for how long a merchant has to “open” their email. If the merchant requests authorization to deduct the funds, they will likely do this in a few days. If they do not, after 8 days of this email sitting in their inbox untouched, Wise will automatically release the funds back to your account. If the merchant pre-authorizes the purchase, the merchant has up to 30 days. This may seem alarming to have your funds waiting in a pending state for that long. But the reason for this is because Wise as your card issuer do not know the final amount at the time of pre-authorization, usually because the merchant expects more services to happen in the future. This is also put in place to keep merchants protected. For example, if you book a hotel stay, you may end up staying longer or making additional expenses at the mini bar or ordering other services that the hotel provides. Once you check out of your stay, the merchant can collect the full amount owed to them. So rest assured your funds are still held within Wise until the merchant makes their collection.
And let's be clear - in the real world, merchant’s will not be receiving emails to collect funds, this actually happens through card processors such as Mastercard and Visa.
If you are certain that the merchant made a mistake and provided you proof that they will not collect the pending funds and you would like to have the pending funds returned to you faster, you can always send us a proof of declined transaction such as a voided transaction receipt and we can have the relevant team review.
More information on this can be found on our FAQ article: A transaction is still pending
If you’re unsure, it’s best to get in touch with our support team. They will inform you if a transaction is still pending and when you should expect to see the funds released back into your balance. If you know a charge should not be there, it may be tempting to immediately dispute the charge, but please try to avoid disputing the charge straight away as these transactions usually resolve themselves in a few days.
When you do dispute a charge, this lets us know you intend to have us file a chargeback to recover the funds.
Filing a chargeback is Wise’s way of fund recovery when a transaction goes wrong. A chargeback can only be submitted if the charge is actually completed. If our card disputes team finds that the disputed transaction is still in a pending state, they will ask you to wait until the pending timeline has passed before reaching out again. If you do dispute the charge and our team later finds that the transaction resolves itself, this will be considered an invalid or false claim which could negatively impact your account if this occurs often. This is why it is often best practice to wait for your account’s transactions to settle themselves before taking immediate action.
If you believe your card or account details have been compromised and are being fraudulently used, then please proceed in filing the dispute straight away.
A false claim can range to harmless negligence, to intentional lies.
There are many scenarios where a disputed charge can be invalidated. Let’s say one year ago our customer John entered into a year-long auto-recurring subscription to his favorite streaming service and today the merchant has charged him again. John opens a dispute immediately because he has been in bed all day and is certain he did not make a transaction with his card. We review John’s dispute and notice he has a history with the merchant, and it appears the merchant is charging him again in the new year for his yearly subscription. We reach out to remind John of this and John realizes that he had forgotten when he started his recurring subscription and that the charge is actually valid. John then asks us to close the dispute. We would then consider the dispute “invalid” since there is actually no issue with the reported charge. Ideally before reaching out to Wise, customers should check first with merchants and make absolutely sure there is no obligation pending that had caused the charge.
As per Wise's policy there are a limit number of times an invalid claim can be done, after these Wise may re-consider continuing providing services to the card holder.
Second possible scenario, let's imagine John’s wife Jane uses her Wise card at an online shoe retail store to order a pair of sneakers. A few weeks later, she disputes the charge claiming she did not receive the order - but she actually did! Unknowing to us, we file a chargeback and the merchant denies our chargeback with proof that the shoes were delivered and that Jane gave the company a good review. We write to Jane informing her we have lost the chargeback and closed her dispute. A few days later, Jane disputes another online purchase, then another, and another claiming that she did not receive any of the orders. Each time we file a chargeback we lose with proof given to us by the merchants that the orders were delivered to the selected delivery address or signed by Jane. Based on this behaviour of a consumer continually making false claims, Wise may deactivate her profile and report the suspicious behavior to authorities.
There are many reasons why you may file a card dispute. When you do, we encourage you to be as truthful and accurate as possible and provide supporting documentation where you can. We need to build a strong case for your chosen reason for disputing a charge - so the more accurate information you provide us, the better chance we have at winning. The outcome of a chargeback is determined by any counter evidence a merchant is able to provide and inaccurate information given to us can cause us to lose your chargeback. If you’d like to know more about the chargeback process, please see our blog post.
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
Wise was founded in 2010 with the belief that international finance should be more fair and transparent. A decade later, the movement for transparency in...
Today, we celebrate the International Day of Family Remittances. Wise was founded by immigrants, built by immigrants, and is used by immigrants. This month in...
In 2019, we signed an amicus brief to the United States Supreme Court in support of the Deferred Action for Childhood Arrivals (DACA) program. Today, we’re...
Today is the International Day of Family Remittances (IDFR), which was adopted by the United Nations (UN) General Assembly to recognize the more than 200...
“Open banking” is moving forward in the United States. Well, actually, it’s been happening through industry-driven partnerships for years, but the government...
In 2018, the United Kingdom first allowed payment companies to gain direct access to its payments systems. Several other countries, in the midst of their own...