Home » Issuing a credit to a customer’s credit card. What are the processing rules again?

Issuing a credit to a customer’s credit card. What are the processing rules again?

At some point and time, most merchants will need to issue a credit to a customer’s credit card for either a returned product, cancellation of a transaction or an adjustment. Merchants are strongly encouraged to review credits issued on a daily basis and should only allow employees that are authorized to issue credits have the appropriate access to do so.

Did you know many processors do not reimburse merchants the interchange fee that is due when a credit is processed? Wind River Financial passes on this reimbursement to its merchants.

Below are some of the Visa International Operating Regulations for reference when processing credits:

  • Merchants may not process a credit without having completed a previous transaction with the same cardholder
  • Merchant may provide a credit to the recipient of a gift purchased as a Mail/Phone Order Transaction, instead of the original cardholder
  • The refund or credit may not exceed the original transaction amount
  • Merchants may not issue credit refunds in the form of cash or check.
  • Cash refunds are permitted for Visa Easy Payment Service Transactions
  • Merchants may not accept payment from a cardholder to deposit funds to the cardholder’s account.
  • Credit Transaction Receipts must be provided to the cardholder and include the date of the credit transaction and identify the merchandise returned, services cancelled or adjustment made.
  • Merchants must “settle” the transaction to make sure the deposit for the credit receipt is within 5 calendar days from the date the credit was issued.
  • If the original transaction was processed in error, the merchant must process the credit within 30 calendar days. The credit card issuing bank receives these funds in 2 business days and must credit the cardholder within 30 days. If your customer indicates they do not see the credit being processed on their account, they will need to contact the issuing bank.
  • Effective January 27, 2013, merchants must also refund any surcharge that was assessed on the original transaction. In the instance of a partial refund, the surcharge amount must be pro-rated.

Do you find it easy to process a credit for a customer? Do you limit the number of employees who can issue credits?

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