Cancelled Order/ Voided Payment = Refund?

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Refund Issue
Refund Issue739×140 15.2 KB

Hi there, I have a customer telling me that they haven’t seen a refund appear on their bank statement, I cancelled the order in the “status” tab which normally takes care of this. But looking again, it doesn’t say refunded, just voided. Can anyone tell me the difference/ what that means, or what I have to do now to refund the customer?

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This is what happens when you run a credit card:

  1. You, the merchant, send an authorization request to the customer’s card issuer asking for approval to charge their card a certain amount.

  2. The card issuer will either approve or deny the transaction. If it is a valid card with sufficient funding, the card issuer will approve the transaction by reserving (but not removing) the funds from the customer’s account.

  3. At the end of the business day (or sometimes a few hours later), your merchant account will automatically settle any authorized funds, which means it finally initiates the transfer of money from the customer’s account to you.

So the difference between a Void and a Refund is that the Void cancels the authorization before it settles the money out of the customer’s account to yours. If a transaction has already been settled, then you must Refund the transactions, which means you are transferring money from your account back to the customer.

In this case, this customer’s card was authorized but the funds were not settled. You voided the authorization which means your merchant account never went to pull money out of theirs.

So if your customer is looking for a refund credit, there will not be one as no money was ever removed. The authorization should fall off within 48 hours. You do not need to refund this customer.

TLDR; you voided the transaction before money was settled from their account and do not need to refund them. Tell them to contact you in 48 hours if the authorization still shows on their statement.

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Thanks for the very helpful explanation! The pending charge was finally removed from the customer’s card however I will note that it took nearly a week for the pending charge to be removed, so it is not always within 48 hours.