Refunds and reversals are ways to return a payment to a customer. Whether you choose to refund a payment or to reverse a payment depends on if the payment is in a closed batch or an open batch:
- Closed batch - Refund
- Open batch - Reversal
Refunds
If the payment is in a closed batch, refund the payment to the customer. There are two types of refund:
Referenced refund
A referenced refund is a refund that the merchant links directly to a previous payment. The merchant refunds the amount of the referenced payment without the customer needing to provide their payment details again. For example, if a customer wants to return an item, the merchant can look up the payment on their POS and return the payment amount directly to the customer.
Unreferenced refund
Note: Only certain merchant accounts can run unreferenced refunds.
An unreferenced refund is a refund the merchant does not link to a previous payment. The customer needs to provide a payment method to return the funds to, and the merchant needs to specify the amount to return to the customer. For example, if a customer wants to return an item but their card has expired, the merchant can return the payment amount to a different payment method.
Reversals
Note: A reversal is also known as a void.
If the payment is in an open batch, reverse the payment to remove it from the batch. The reversal cancels the transaction before we process it. For example, a customer buys an item in a shop and returns the item before the merchant closes the batch. The merchant can run a reversal so that they don’t charge the customer.