Visa is introducing an authorization requirement, or mandate, for return transactions (also known as a cardholder refund). 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 has been closed. The return authorization message is intended to improve the return process, minimize return inquiries and improve the customer experience for cardholders by enabling them to view a credit/return on their online banking account/statement in real time and receive other services from the card issuer such as text alerts. Most Point of Sale (POS) systems were not previously designed to obtain an authorization to return money to the cardholder. Prior to this update, a return transaction was stored in the system until submitted for a settlement. With this in mind, below are key items to consider in regards to returns:
- Evaluate your internal/external processes to understand the impact of the return.
- Evaluate correct handling of a return transaction response. If you think employee training is necessary please see FAQs below.
- Evaluate if your POS systems can support obtaining an authorization for a return or if your application is in need of/updating.
- April 14, 2020: Issuers will be entitled to initiate chargebacks on return transactions when the merchant fails to obtain an authorization. The issuer holds liability for an authorized Visa return submitted for settlement. The merchant holds liability for an unauthorized Visa return submitted for settlement. Merchants need to ensure their POS will authorize returns.
- July 1, 2020: Return / Refund transactions will be included in the Visa Zero-Floor Limit and Authorization Misuse Process Integrity Fee Assessment. Unauthorized returns submitted for settlement will be reported as a Visa Zero-Floor Limit non-compliance transaction. Authorized returns not submitted for settlement and are not reversed will be reported as Visa authorization Misuse non-compliance and merchants may notice higher fees on their merchant statement.