Over the past few months, Verifi has been working closely with our merchant and issuing partners to build shared awareness and understanding of impacts, and support your preparedness to help ensure a smooth and successful launch.
1. Does Visa’s new return authorization mandate enable the cardholder-initiated refunds to settle sooner?
Visa Purchase Return Authorization is intended to increase consumer visibility to refunds in process by making pending refunds visible via online and mobile banking channels.The length of time between refund issuance and when the consumer sees the funds appear in their account can vary based on the processing timelines for each party in the return/authorization process. Some acquirers process refunds in real time, while others batch process daily. We recommend confirming refund processes and timelines directly with your acquirer to understand how this may impact you.
2. Would use of the Verifi solutions enable the cardholder to receive a refund more quickly?
CDRN informs issuers of a merchants intent to resolve a pending dispute via a refund, although the refund itself is not processed directly through the Verifi CDRN solution.
3. Is Visa’s new Return Authorization mandate applicable only to card-not-present or e-commerce returns?
We understand Visa Purchase Return Authorization to apply to all purchase returns, regardless of point of origin.
4. If a merchant receives a decline on a return authorization and chooses to issue a refund to an alternative method of payment, would it be appropriate to issue a refund to another of the affected cardholders’ Visa cards? Does that Visa card have to be associated with the same financial institution as the original method of payment?
In the event a refund authorization to the original method of payment declines, Visa recommends refunding the consumer via and alternate Visa card, although it’s not required. It is most important to ensure the cardholder receives their refund, and the merchant has documentation to support proof of refund.
5. If my attempted customer refund is declined, what are my options as a merchant?
Visa’s suggested merchant action on various decline response codes is available here:
|Response Code(s)||Description||Suggested Merchant Action|
|14||Invalid Account Number or Account Type||Request alternative Visa Card to perform the refund or, if this is not available, perform refund using another method.|
|39, 52, 53||Invalid Account Type||Verify that the customer has selected the correct account type (credit or debit) on the POS device.|
|54||Card Expired||Inform customer that the card is expired and ask the customer if a replacement card is available to re-perform the refund. Otherwise, ask for an alternative Visa Card or, if this is not available, perform the refund using another method.|
|55||Invalid PIN||Perform normal Online PIN re-try processing.|
|All other decline codes||Declined||Ask for an alternative Visa Card, or, if this is not available, perform the refund using another method.|
6. In the scenario where a refund is requested on a prepaid card and the physical card is no longer in use/available, what next steps should a merchant take to deliver the refund to the consumer?
In the prepaid example, where a refund is unable to be processed, it is best to process the refund to another method of payment. An alternate card is preferred, however refunds may also be provided via cash or check. It is important to keep thorough records of refunds processed via an alternative method of payment, to provide as compelling evidence in case of a dispute.
7. If a merchant refunds an alternative method of payment, is there still the possibility of the customer being “duly enriched” through both a refund to the alternate card and a provisional credit to the original card?
There is a possibility of the customer being duly enriched in this scenario. Based on discussions with our issuing partners, as long as a merchant can provide clear documentation that a refund was successfully provided to the same cardholder, even if through an alternate method, you have proper compelling evidence to successfully represent the dispute.
8. Are all acquirers in compliance with the Visa Purchase Return Authorization timelines?_
We have heard from some of our acquiring partners that they received deferments on Visa Purchase Return Authorization into 2020. Verifi recommends merchants reach out directly to their acquirer(s) for specific details on dates. Merchants and acquirers in many European markets have seen compliance dates deferred to 2020, as well.
9. If I receive a decline on the return authorization, does this also mean the original transaction was not authorized?
If a merchant receives a decline on the return transaction, it does not necessarily indicate that the original transaction was declined. The original purchase transaction and the purchase return transaction will receive separate authorizations. As a best practice, we recommend linking the return transaction to the original transaction, providing a link between the two transactions within your internal systems, as well as for issuers and acquirers, alike.
10. How do I handle returns on digital goods declines? My specific Merchant Category Code (MCC) does not allow me to process refunds with this update.
In this instance, we recommend working directly with your acquirer to explore alternative options for refunding consumers.
11. Are there going to be any additional fees I have to pay as a merchant to refunds refunds through the new Visa purchase return authorization process?
Authorization fees may be assessed by your acquirer. It’s important to reach out to them to confirm applicable fees for purchase return authorizations.
12. If a refund needs to be issued to a different account because the refund authorization fails, will we see an increase in chargebacks filed by issuers?
We’re closely monitoring impacts and will continue to work with our merchant and issuing partners to support effective refund processes.
13. Can I still send a refund settlement without a corresponding authorization? What is my “risk” of non-compliance?
Verifi cautions against submitting a refund settlement without a corresponding authorization method, as after April 2020, any refund without a valid authorization could be at risk for issuer chargeback under reason code 11.3. Additionally, effective in July 2020 any return authorization without a corresponding settlement record will be included in Visa’s Misuse of Authorization program and fees. Please check with your acquirer(s) to identify non-compliance fees associated with these programs.
14. How will Visa Purchase Return Authorization work with Verifi CDRN? Is there any plan to integrate CDRN into Visa’s return process?
Customers participating in Verifi CDRN should continue to follow standard refund processes. We’ll keep you informed of additional developments as we continue to evolve our new partnership with Visa.
15. What can I do as a merchant to ensure the issuer reviews the ARN information to understand where the return transaction stands before initiating a dispute?
ARN is not consumed/used universally by all issuers. As a best practice, merchants are encouraged to link any returns to the original sale using both the ARN, Visa Transaction ID, and where possible, reference to the merchants original order number.