The Difference Between Real-Time Purchases and Purchase Returns

Considering all the real-time access to information consumers have at their fingertips, from the news of the minute to the current balance of their checking account, waiting for critical data beyond a few hours has become more the exception than the rule. Unfortunately, all things haven’t been considered equal when it comes to purchases and purchase returns.

Take for instance, the purchase just made at the local grocery store will almost immediately appear as a pending authorization on the cardholder’s online banking or credit card account. Reviewing one’s balance through a smartphone app has nearly replaced the need for recording charges into your check register or reviewing your monthly credit card statement.

However, on the other side of the equation, the exception has always been the inability to view recently completed purchase returns on a the same timely basis. The delay associated with a purchase return not only impacts the availability of funds to the cardholder but also creates a potential customer service nightmare for the merchant. Given the offline nature of the current process, a purchase return arrives at the issuing bank within two business days at the earliest. From that point, it is up to the posting policy of each individual issuing bank as to how quickly the funds become available.

Through no fault of their own, the merchants have no visibility to that process once they settle the batch containing the purchase return. Of course, that doesn’t stop the cardholder from assigning blame when any perceived delay occurs with the posting of their funds. Unfortunately, the merchant often takes the brunt of their frustration along with no power to expedite the process.

Visa’s New Solution

As a resolution to this issue, Visa is introducing an authorization for purchase return transactions. This is intended to improve the process by enabling cardholders to view a credit/return through their online access in real time. By enabling an authorized purchase return that is pending settlement to appear on an online statement (like a purchase), it will improve the cardholder experience and reduce merchant service inquiries about the return.

Additionally, authorizing a purchase return enables the issuer to validate the cardholder account, decline potentially fraudulent cards and minimize chargebacks if the account does not exist or is closed. The Visa purchase return authorization is an online transaction that will include the same valid authorization response data as any other authorization, such as a purchase for example.

Timing & Important Notes

All merchant processing applications and systems must be prepared to receive and submit Visa credit return authorization messages by April 13th, 2019.

Please note that this currently only applies to Visa transactions as no other card associations have communicated this change. However, we anticipate that MasterCard, Discover and American Express will likely follow in the near future.

In order to accommodate this mandate, all Wind River supported terminal applications will have this functionality added over the next few months. Please stay tuned for further communications which will provide update instructions.

For those merchants utilizing 3rd party applications and gateways, don’t hesitate to reach out to your solution providers for an update on their status related to this mandate.