What causes a negative card balance?

Negative card balances are rare, but may occur when using a PEX card. They occur when a merchant settles a transaction for an amount in excess of the available funds on the card. In this case, there will be an automatic transfer of funds from the business balance to the card to cover the negative balance.

Please note:Because of the rules governing both merchants and cardholders on the Visa and MasterCard networks, no card issuer can guarantee that 100% of all transactions will be blocked.

Negative balances can occur on PEX cards due to unintentional overages connected to tips, fuel pump purchases or other types of settlements. Unfortunately there is no way to completely eliminate negative balances. PEX can decline transactions at the authorization stage. There is no way to decline a settlement transaction. Below is a list of situations that may cause a card to end up with a negative balance.

Fuel Pump: Most fuel pumps authorize a card prior to the actual pumping of gas. This authorization is typically for $49 and will be approved if the cardholder has $49 available on the card. If the cardholder then pumps an amount of gas in excess of the $49, the fuel merchant will settle for the total amount of gas pumped. If the total amount owed to the merchant exceeds the current balance on the card, the card balance may become negative.
Restaurant: Upon purchasing a meal at a restaurant, the card is swiped, and authorized for the amount of the meal. The cardholder may then choose to add an optional tip to the receipt. At the end of the day or the following day, the restaurant will settle for the total amount including the tip. If the total amount, including tip, owed to the restaurant exceeds the current balance on the card, the card balance may become negative.
Hotels: A hotel purchase may result in a negative balance in the case where additional charges are applied in excess of the original authorization. These additional charges may be for optional services such as room service, mini-bar purchases, laundry, parking or other incidentals added to the original bill.
Force Posts: A “force post” is a transaction settled by a merchant which is not attached to a prior authorization. More often, force posts are collection activities where previous authorizations existed but have expired. If a merchant has authorized a card for a certain amount, but has not settled the balance within the allowed time span (3-14 days), the authorization will be released making the funds available. If the cardholder then spends those funds before the merchant settles for the original amount, the final settlement will cause the card to have a negative balance.
Other: Other settlement scenarios can result in a negative balance, but are rare.

In the cases above, the merchant is not liable for a chargeback as the settlement was for a legitimate purchase and the cardholder received the goods or services provided. Admins should discuss their business’s policy in cases of accidental or intentional overspend by the cardholder. The best way for cardholders and admins to reduce negative balance occurrences is to routinely check their balances and transaction history.