A couple of weeks ago we had dinner with a friend visiting from Hawaii. We had a $100 Visa gift card in hand to put a big dent into the bill.
We were confused when the card came back declined. At first we checked the balance on the card because we thought that they had given us less than they had promised (it was for a rebate). That wasn't the problem: we knew how much was on the card, and we didn't overcharge that amount. We finally talked to the manager of the restaurant, and he suggested in the future that we first try to charge half of the gift card's value to see if that takes, and then try the other half. “Sometimes it works the first time; other times it doesn't,” is what he told me.
In any case, the meal finally got paid for, and we didn't even have to stay to wash dishes.
Here‘s what I think might have happened
I did a search for hold on gift cards and ran across this FAQ from Visa:
“When using your Visa Gift card to initiate a transaction at a merchant where a tip may be included, be sure your balance is sufficient to cover an additional 20% above your total bill. If the bill, plus estimated tip, exceeds the available balance on the card, the purchase will be declined …”
Since our bill was larger than the amount on our card, there was no 20% wiggle room. Somehow they did manage to debit the gift card even though the total bill was larger than the balance on the card.
It makes sense that there should be a buffer for the tip for two reasons: (a) the tip isn't forgotten as it can be with gift card, gift certificates, etc., and (b) the server can treat the gift card basically like a credit card when it comes to writing in the amount of the tip: there's room for most tips right on the card.
The main lesson we learned is that there are easier places to spend a Visa gift card than in a restaurant; the declination because of the tipping cushion was a distraction. Had we just bought groceries with it, there probably would have been no issue.
There are credit card that don’t allow you to capture more than the authorized amount. If you authorize the subtotal you have to charge the tip separately and pay another merchant fee, or get declined for the tip. I can understand the restaurant perspective on this one.
Interesting. Thanks for the heads up on this!
We learn something new every day, it’s often said. What you shared was news to me:) Interesting how they used the 20% figure. I tip between 15% to 20%, depending on service, but not more than that range very often. It’s nice for the server to have that protection, I suppose! But for the consumer…well, I agree that it seems easier to go buy groceries or something else instead.
Glad you didn’t have to wash dishes! That’s a great tip to file away for the future.
The other nitpick is whether the tip is pre-tax or post-tax. You will see different restaurants approach this in different ways. To be fair, I think it should be pre-tax. In states like Oregon, they don’t have sales tax.