If before you take the car out of the lot you change your mind and have the rental agency void your contract, the $350 authorization will continue to sit on your card until it expires in 7, 10, 14, 21, or however many days your card-issuing bank determines (and there's nothing the merchant can do to void the authorization--your best bet would be to call your bank and ask them how to void it).
Unless that's a very recent change, that's not true at all. You can't do anything about it, as your bank has no way to know if you're lying about the authorization. The merchant, and only the merchant, can request that the credit card company undo the authorization.
Years ago when I worked for JCPenny, we had a special computer terminal in the store's local credit office which was used to cancel authorizations for the JCP card when a transaction needed to be voided. Actually it didn't really cancel the authorization, but instead in effect issued a temporary credit authorization for the same amount and in effect restored the customer's credit limit. At the moment I can't recall if we were able to use the same terminal to undo Visa/MC or if we actually had to call them, but I do know that it was up to us to deal with Visa/MC, as again the CC companies had no way to know if the customer was lying or telling the truth. Only the merchant was trusted to request undoing the authorization.
OK, all right, you called me on the carpet.
I oversimplified things (partially because I was literally on my way out the door and didn't feel like adding yet another paragraph or ten). You are (mostly) right.
The procedure for reversing an authorization is something that varies by the card-issuing bank. Once the authorization number has been granted, that authorization belongs to the cardholder's bank, and that bank can make up whatever rules it wants about how to handle that authorization--from how many days until the authorization expires (though card association rules state that the merchant is guaranteed the money from an authorization up to 30 days, even if it causes a cardholder to go over his/her credit limit) to what is required to void an authorization.
Some banks will accept a phone call from the merchant as grounds for reversing the authorization, and different banks have different levels of verification (I've had some take my word just with the dollar amount and authorization number--both of which are printed on the customer's receipt--while others make me give my merchant number and bank number).
Other banks require a faxed letter on company letterhead from the merchant before releasing the authorization.
Still other banks won't even talk to the merchant if the merchant calls (note that there are no special backdoor numbers that a merchant can call for this purpose--in order to get in touch with the card-issuing bank, the merchant must call the number on the back of the cardholder's credit card; if the merchant calls their authorization network [e.g. Global Payments], they will not be able to help the merchant, as the authorization is now under the control of the bank) and require the cardholder to request the authorization to be released. Most then want to verify information from the merchant, but I've actually seen a bank release an authorization without speaking to anyone other than the cardholder.
And there are even a few banks out there that won't touch the authorization and will force the cardholder to wait until it expires.
Unfortunately, there are no "special machines" like you had at JC Penney that will reverse an authorization. Actually, the procedure you describe for the JCP machine is interesting and can't be duplicated for other card types, since a credit processed by a merchant does not involve any kind of real-time authorization process (there's no money to be "held," so it's not necessary to run an authorization to verify and earmark funds). A credit is a completely offline process: the credit is processed as part of the end-of-day batch. JCP, as a retailer issuing its own card, can set its own system up in the way it chooses, but VI/MC/AX/DS/DC/CB, etc. don't work this way, and with those cards, none of the back-end banks or authorization networks involved know about the credit until it is uploaded at the end of the day.
There is one exception: Visa's systems (and Visa
only--not MasterCard, American Express, or any others) do have the ability to modify an existing authorization electronically--either increasing it in the form of an incremental authorization or decreasing it in the form of an authorization reversal. This is due to Visa's regulations with regard to how charges are settled against authorizations. With all of the card associations except for Visa, a merchant may submit a charge for up to 15% above the authorized amount. If the final total is over 115% of the original authorization, a second authorization for the difference must be created, and when the charge is posted, it is actually submitted as two separate charges. However, the merchant is charged a penalty if he or she runs runs three or more authorizations, so in a situation where the final total may differ significantly from the original estimate (as in a hotel room or rental car transaction), the merchant is encouraged to create a very large initial authorization, as multiple additional authorizations (i.e. when extending the stay) will incur a penalty.
With Visa, again, a merchant may submit a charge for up to 115% the value of the original authorization, but if it is over that, the procedure is slightly different: instead of running a separate second (or third or whatever) authorization, the terminal can request an
incremental authorization, which alters the value of the existing authorization. In this way, the merchant can increase an authorization but still submit the final charge as a single charge, which is what Visa encourages. (Most terminals are set up to automatically process an incremental authorization if needed when the merchant inputs the final total, so the process is transparent.)
However, Visa also penalizes merchants if the final total submitted is
less than 15% less than (that is, 85% of) the value of the authorization. In other words, if the merchant authorizes $100, the merchant is penalized if he or she submits a charge for $84.99 or less against that authorization. To resolve this issue, the Visa system allows the merchant to process an
authorization reversal, which releases the appropriate amount from the authorization so that the final charge is within 15% of the authorized amount. (Again, most terminals are set up to automatically process an authorization reversal if needed when the merchant inputs the final total.) This is contrasted with the MasterCard et. al setup, where a merchant is perfectly within his rights to submit a $3 charge against a $300 authorization, so a way to adjust an existing authorization is not needed.
Some (but not all) terminals that are outfitted with this Visa incremental authorization and authorization reversal system allow the merchant to manually process an authorization reversal. It is on these terminals where the merchant can, if needed, release an existing authorization, giving a cardholder access to his or her credit. What actually happens in this case is that the terminal adjusts the existing authorization to $1, which is the minimum amount an authorization can be for.
However, relatively few credit card terminals (that I've seen) are outfitted with this ability, and even if a merchant has one that is capable of this, it is not likely he or she knows how to access that function.
In any case, back to Alan's assertion: the reason I said that your best bet would be to call your bank and ask them how to void an authorization is because each bank is different and may require a different thing from your merchant before releasing the authorization (and may not require anything at all), so having the customer call is the simplest way to deal with the issue. For example, at my business, we deal with a lot of Wells Fargo cards, a smattering of local banks and credit unions, and Bank of America (since virtually everyone carries the Alaska Airlines Bank of America Visa). IIRC, Wells Fargo requires a letter faxed on company letterhead. Bank of America requires the merchant call them (and will transfer you at least twice before ending up at the correct department). At least one of the local banks will take the customer's word for it, while another is only open during banking hours and nothing can be done in the middle of the night. Again, simpler for the customer to call and figure out what needs to be done and then tell the merchant what to do.