When I make a purchase at the bottom of the screen in monzo it will say “pending transaction” for a day or two. Why is this?
Because the company you have purchased the item from hasn’t actually claimed the money yet, Monzo has just portioned it off (essentially) for you.
It’s why your old bank had, “balance” and “available balance”, (balance - payments presented but not taken = available balance).
To add a bit extra there are two ways merchants take money. Either:
Authorisation + Capture
The bank of the customer confirms they have sufficient funds to complete the purchase (marked as pending). The merchant fulfils the order/service and then requests payment from the ringfenced money (capture). Something like ordering shoes online where they need to obtain the item from stock and ship. If they don’t have the item or can’t fullfil the order then they can cancel the authorisation to release the held amount. The pending can be held for a week, after that it will automatically be released if not collected and you could spend it. If the merchant still hasn’t captured the payment they have until 30 days from the original auth request to collect before the approval expires but no guarantee of payment in that time frame that the customer has the funds still.
The authorisation amount put on hold can be different from whats actually collected. Like Pay at Pump will either hold £1 or £99, and then collect (capture) whatever you actually filled up later.
If you ever have a pending transaction that you are waiting for the merchant to release the held money where you know it won’t be taken, you can ask Monzo and they will step in to release the funds immediately so you have it available to spend again. They will always say the merchant may try and collect to cover themselves, as in don’t spend it unless your 100% certain its not owed.
This performs authorisation + Capture in one transaction. Like buying a coffee in a shop. They would take payment immediately as they are handing you the goods in person. This is also used online for purchases that aren’t physically shipped.