Merchant Update: Visa To Require Online Authorizations For Refunds
Visa is introducing an authorization requirement for return (cardholder refund) transactions. Authorizing a return enables the card issuer to: validate the cardholder account, decline potentially fraudulent cards, and minimize chargebacks if the account does not exist or is closed.
The return authorization message is intended to improve the return process by enabling cardholders to view a credit/return on their online banking statement in real time, as well as support other issuer services such as text alerts, in order to improve the cardholder experience and minimize return inquiries.
- Improves customer experience and satisfaction
- Reduces customer service inquiries related to lack of real-time information about a refund status
- Provides real-time issuer account validation
- Minimizes related chargebacks
All merchants are required to process purchase return authorizations beginning in April 2019.
How is this different from how returns are currently processed?
Currently, the cardholder returns a product for a credit. When the merchant processes the return, the point of sale (POS) system doesn’t dial out; it stores the transaction in the system, and the cardholder is unable to view the information in their account until after a merchant settlement is processed and posted by the cardholder’s issuing bank.
With this new directive, cardholders will return the product for credit but when the merchant processes the return, the POS will dial out and the merchant will receive a response on their POS. The cardholder can then view the transaction information immediately in their account they have with the card issuing bank. In most cases the response from the POS terminal will be an approval, but if a decline is issues, it would generally be in response to a fraudulent card or the fact the account is closed or doesn’t exist.
If you have any questions or concerns about the new Visa Return Authorization, please call us at (800) 555-9665.