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Merchant Account Services | Card Processing Voids & Refunds

All businesses that process credit card transactions through their merchant accounts will face customer voids or refunds from time to time.

If you own or manage a business, you’ve likely encountered these situations.  Have you ever wondered what the difference is between a voided credit card transaction and a refunded transaction? If so, you’re not alone.

When it comes to credit card processing, there is sometimes confusion among merchants about whether a transaction will be considered void or whether it will be marked as a refund. Hopefully, this will help clear things up.

Merchant Transactions

As you know, all businesses that accept credit cards as a form of payment do so through their merchant accounts via their credit card processor.

At the time of a sale, customer credit cards are swiped, keyed-in, or processed through a payment gateway in online transactions. Behind the scenes, the card-issuing bank is contacted and returns either an approval or decline to process the payment.

Although a merchant may receive instant authorization for payment from a customer’s credit card provider, the payment is not complete until the transaction information is submitted to the processing bank.

Typically, all merchant account transactions from a business are compiled and submitted at predefined intervals.  In most cases, the settlement of all compiled transactions happens once daily, at the end of each business day.

voidVoided Transactions

For a credit card transaction to be considered a void, it must have been canceled before the transaction has been settled. Therefore, with merchants that settle on a daily basis, voids can only happen before settlement on the day that the transaction was processed.

When a merchant voids a credit card transaction, the purchase or sale amount will not post to the customer’s credit card account. Although the customer’s card was not actually charged, there is sometimes a temporary hold for the purchase amount.

The customer may see the charge in their account and think the merchant did not void the transaction when, in fact, they did.

Merchants that receive this inquiry from customers can explain that this charge will be listed as “pending” in their credit card account until it is removed by the credit card issuing bank. This charge is known as a “soft charge” and can show as pending for up to 7 days.

refundRefunded Transactions

If the customer has a return or requests a refund after the daily settlement by the merchant, the charge has already posted to the customer’s credit card account, and a transaction refund is necessary.

Refunding a customer’s credit card transaction is a relatively simple process and can be completed using the credit card terminal or in the case of online transactions, through the payment gateway.

Most credit card terminals and online payment gateways allow for refunds to be processed up to 90 days after the settlement. It can take up to 5 business days for a refund to post to a customer’s credit card account.

For more information or detailed instructions on processing refunds, consult the manual for the terminal or contact your credit card processor.

Merchant Account Services from The Transaction Group

The Transaction Group (TTG) assists businesses of all types in setting up merchant account services. Our industry knowledge and banking partners ensure that our clients receive honest answers, reliable service and the most competitive pricing.

If you are just getting your business started and have no credit card processing history, we’d be glad to help get you started on the right foot.

In addition, we are specialists in high-risk merchant accounts and offer a streamlined application and fast approval process. Also, we gladly accept applications from merchants with bad credit.

Ans if you already have a merchant account and are interested in saving money, take advantage of our FREE Rate Analysis by emailing a recent statement to sales@thetransactiongroup.com . We’ll get back to you within 1 business day.

Do you need more information about refunds and voids or have other general merchant account questions? Give us a call. We’d be happy to help any way we can!