Canceling / refunding a transaction

This page presents the differences between transaction cancellation and refund.

Examples of use cases

• Cancellation feature : a user has ordered two products from you. They are definitively out of stock. You cancel the transaction so that the buyer’s account is not debited.
• Refund feature: the client has returned the product as it did not match their requirements, the product has been damaged during shipping, etc. The Merchant must refund the buyer.

The difference between cancellation and refund

The transaction must be canceled before it is captured at the bank. However, with some acquirers, the cancelation remains possible as long as the transaction lot has not been cleared (lot closure).

However, if the transaction has been captured at the bank, and the cardholder debited, a refund will have to be made. The amount of this refund is generally lower than or equal to the initial amount but, with some Acquirers, it is possible to refund an amount that is greater than the initial amount (for example, if an Acquirer returns a product and the Merchant refunds the order amount and the return costs), within a certain limit set by the Acquirer. Thus, the refund operation allows to re-credit the Buyer's bank account. The Merchant's account is debited with the corresponding amount.

Cancel

Cancellation cannot be partial. Since cancellation occurs before capture in the bank, the buyer should not see any operations on their account.

Cancellation and prepaid cards

In case of a payment made with a prepaid card and authorized by the issuer, the Buyer's bank account is debited immediately, without waiting for the payment to be captured in the bank (as in case of most bank cards). If the Merchant cancels the transaction before capture in the bank, the payment method holder's account is not updated in real time (except in case of automated fuel dispensers). The Buyer's balance will be restored at the end of the authorization validity period, which can be up to 30 days depending on the type of the card.

Refund

Refunds are always done for operations that have been captured at the bank (but have not been necessarily credited to the Merchant account yet, it depends on payment delays). However, for some Acquirers, refunds can be done for transactions that are included in the batch sent as compensation ("cierre de lote" in Latin America).

Refund refusal

For the CB network, we indicate the code and reason for refusal returned by the buyer' s bank. If the refund request is made from the Merchant Back Office, a warning message is displayed:

"The financial institution has refused the refund request for internal reasons: [for example, the refusal code: "12: invalid transaction"]. Please refund your buyer using another payment method (check, transfer...)".

For example, if the refund request is made on a card in opposition, the code and reason for refusal will be "59: suspicion of fraud" for certain acquirers. See the list of return codes specific to the CB network for more details.

Latin America

In South America, the remittance process is somewhat different: as long as the bank has not started processing the remittance file sent by the payment platform, a transaction can be cancelled. However, once the acquirer has started processing the remittance file, no reversal can be taken into account (this is known as batch closure or "cierre de lote"). As a result, even if the transactions appear in the "Discounted Transactions" tab in the Merchant Back Office, the merchant can attempt a cancellation request. Depending on the status of the transaction, the acquirer will either proceed with the reversal or reject the request by notifying the payment platform. In the Merchant Back Office, the merchant will be instantly notified of the outcome of their request. If the cancellation is not possible, the merchant will have to make a refund request.

A refund cannot be made for an expired card (GIE CB rule). In this case, the Merchant must use another method to refund the customer (wire transfer, cheque, etc.).

Before making a refund, some Acquirers (i.e. Sofort) check the Merchant's account balance to make sure they can honor the refund.

Depending on the Acquirer, it is possible to make an unlimited number of refunds provided that the total refunded amount does not exceed the initial amount. Some Acquirers accept to go beyond the initial amount to refund the customer's return shipping costs (goodwill gesture). Depending on the Acquirer, refunds are only accepted starting from a certain amount (e.g.: € 0.50).

Refunding a Buyer (funds arriving in their bank account) can take between a few days and a month. What explains this delay? In general, banks manually validate the refund because these operations present a risk. Therefore, there may be a delay if the bank takes time to validate certain refunds.

In summary

Not captured transactions:

• "Cancellation" feature only.
• Transactions are visible in the "Current Transactions" tab of the Merchant Back Office.
• Via REST Web Service: Transaction/Cancel.

Transactions submitted for capture or settlement:

• General case: "refund" function only, cancellation is no longer possible.
• With some acquirers: "cancellation" and "refund" functions are available, but cancellation is really only possible if the transaction is not yet cleared (real-time check of the transaction status).
• Transactions are visible in the "Captured transactions" tab of the Merchant Back Office.
• Via REST Web Service: Transaction/Refund.