Pay at pump charges: fees explained and how to avoid them - as drivers slam Tesco £120 pre-authorisation cost

Drivers have complained that they are being charged up to £120 in pre-payment fees at some petrol stations.

Motorists filling up at Tesco stations have expressed their surprise after discovering the fee on their bank statement after using the pay-at-pump service. In some cases, they have found the sum still hasn’t been released after several hours, potentially stopping them from making other purchases.

Although the pre-authorisation charges are once again making headlines, they have been in place for more than a year after credit card companies changed how they operate.

Until 2021 most filling stations applied a £1 pre-authorisation fee to check the card used was valid. In 2021 Tesco began trialling a £99 “available funds” fee and in February 2022, Tesco, Asda, Sainsbury’s and Morissons all confirmed the £99 charge was being rolled out across their filling stations.

The change was made by credit card companies Visa and Mastercard to ensure that customers had sufficient funds in their accounts to cover the cost of their fuel. They said the charge would help motorists manage their budget better by stopping them from going into unarranged overdrafts and would help retailers by ensuring drivers can’t take more fuel than they can afford.

However, after hiking the charge to £99, the card companies have now increased the pre-authorisation fee to £120. Tesco is the first of the supermarkets to implement the new charge, with Asda still pre-authorising £99 and Sainsbury’s and Morrisons applying a £100 fee.

The charge means that when you use your card at a pay-at-pump machine, your bank is asked to authorise a payment up to £120. If you have sufficient funds the payment is allowed and you’ll be able to fill up. If you have less than the requested amount, your bank will send a message back to the payment terminal and your fill up will be capped at your account balance.

Once you’ve filled up, the actual cost of your fuel is deducted from your account and the balance of the pre-authorisation charge is released. Card issuers and retailers insist the money never leaves your account but it is ring-fenced and can’t be spent until the funds are released. This usually happens within a few minutes but some drivers have reported it taking far longer, leaving them short on funds for up to 48 hours.

The fee is only applied to pay-at-pump transactions and drivers can avoid paying it by using their card at the filling station kiosk.

Responding to the latest complaints from drivers, Tesco said: "Following discussions with Visa and Mastercard, we confirmed last year that we would be changing the way customers pay for their fuel at a small number of our forecourts.

"With these changes, the customer’s bank will now pre-authorise £120, with the unused amount released back to their account immediately. This change is now in force across all Tesco petrol stations. But if a customer doesn’t get the refunded amount immediately they should contact their bank as a first port of call."

A statement from Mastercard added: “Although customers may notice in their banking apps an initial transaction for a higher ‘pre-authorised’ amount than the fuel they bought, this is very temporary, as almost immediately after the sale is made the exact value of fuel dispensed is withdrawn from their account, and any remainder of the pre-authorised amount is released for use.”