Refund
The process of returning funds to a cardholder after a transaction has already been settled, reversing a completed payment and transferring money back from the merchant's account to the customer's card.
A refund returns money to a customer after a transaction has been completed and settled. Unlike a void, which cancels a transaction before settlement, a refund processes after funds have already been transferred to the merchant's account. The refund process involves the merchant initiating a credit transaction that reverses the original charge, with funds typically appearing in the customer's account within 5-10 business days depending on the issuing bank.
Merchants typically pay processing fees on both the original transaction and the refund transaction, though some processors charge reduced fees for refunds or credit the interchange fees. The refund must be processed to the same card used for the original purchase, and merchants cannot refund more than the original transaction amount without processing it as a separate transaction.
Common scenarios requiring refunds include returned merchandise after delivery, cancelled services after they've been billed, customer dissatisfaction with products or services, and billing disputes resolved in favor of the customer. Partial refunds are also possible when only some items from an order are returned. Best practices include processing refunds promptly to maintain customer satisfaction, documenting refund reasons for accounting and fraud prevention, retaining proof of the original transaction and refund for potential disputes, and monitoring refund rates as excessive refunds can trigger processor reviews or account holds.
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3D Secure
An authentication protocol for online card transactions that adds an additional verification layer between the cardholder and issuing bank, shifting fraud liability from merchants to card issuers when properly implemented.
ACH Payment
Automated Clearing House payment is an electronic bank-to-bank payment method that transfers funds directly between bank accounts through the ACH network, typically used for direct deposits, bill payments, and recurring transactions.
Acquirer
A financial institution that processes credit card payments on behalf of merchants, maintains merchant accounts, and facilitates the settlement of funds from card-issuing banks to merchant bank accounts.
Address Verification Service (AVS)
A fraud prevention tool that compares the numeric portions of a billing address provided during a transaction against the address registered with the card-issuing bank, returning match result codes to help merchants assess transaction risk.
Aggregator
A payment service provider that enables multiple merchants to process card transactions under a single master merchant account rather than each merchant having their own dedicated merchant account, common with services like Square, Stripe, and PayPal.