How to Comply with New Visa Requirements for Returns & Refunds

Jessica Velasco | Monday, May 13th, 2019 | 11 minutes

Visa has introduced a new purchase return authorization message and is requiring that merchants comply with additional processing regulations.

But what is a purchase return authorization message? And what exactly are merchants required to do?

Here’s an easy-to-understand explanation of the new Visa refund authorization process.

Initiative Overview

The following is a high-level overview of Visa’s intentions with the new purchase return authorization process:

WHAT processes are changing?

The new regulations apply to what Visa calls “purchase returns”. A purchase return is commonly referred to as a refund---the merchant refunds the original transaction and credits the cardholder’s account.

WHY are processes changing?

Prior to Visa’s update, it could take two to five days for credit to appear on a cardholder’s statement. From the time the cardholder requested a refund until the time money was deposited, there was no transparency. The cardholder didn’t know if a credit would be issued or when it could be expected.

The lack of transparency for refunds contrasted significantly with the real-time insight that cardholders have for transactions.

So, Visa set out to provide cardholders with a quicker resolution and greater clarity. The result was a new authorization process.

HOW are processes changing?

Authorization can be thought of as a conversation that happens between the merchant and the cardholder’s bank in real time.

Most merchants are aware of this “conversation” that happens while processing a transaction. A merchant must ask the cardholder’s bank for permission to charge the cardholder’s account. The bank either approves or denies the purchase, and the decision is immediately visible on the cardholder’s statement.

Now, Visa is requiring that this same conversation happens when a cardholder requests a refund. The purchase return authorization process will let the cardholder monitor a pending refund the same way they monitor pending transactions.

WHEN are processes changing?

Compliance deadlines were staggered by region:

  • April 2019 - All merchants in USA and Canada; all merchants in the LAC (Latin America and Caribbean) region with annual refund volume of at least $1 million
  • October 2019 - All USA, Canada, and LAC merchants; all merchants in the AP (Asia Pacific) region and CEMA (Central and Eastern Europe, Middle East, and Africa) region with annual refund volume of at least $1 million
  • April 2020 - All merchants globally (USA, Canada, LAC, AP, CEMA, and EU)

How to Comply with Visa’s New Regulations: FAQs About the Refund Process

Here are some questions merchants have about the new process and answers to help comply with updated regulations.

How do I submit a Visa purchase return authorization request?

Follow these steps when a cardholder requests a refund:

  • Ask to see the receipt for the original purchase. Check to make sure the transaction was processed with a Visa debit or credit card.
  • Enter the purchase return information in your point-of-sale (POS) system.
  • Send the authorization request to the cardholder’s bank.
  • Wait until you receive an authorization request response.
  • If the request has been approved, finalize the refund.

Do I have to swipe the card to initiate the authorization process? What if the customer doesn’t have the card?

No, the card doesn’t need to be present. You can submit an authorization request without it — just scan the purchase receipt to obtain the card information.

What should I do if the customer lost the original receipt?

If the customer has the Visa card that the original transaction was processed on and you can use it to find the order in your system, then you can still submit an authorization request and refund the account.

What if the purchase was a gift, and the customer doesn’t have the receipt or the card?

You can only apply credit to a Visa account if you can prove the original transaction was processed on a Visa card.

Without the receipt or the card that made the purchase, that will be difficult to do! In those situations, you’ll need to offer an alternate form of credit: cash, in-store credit, a gift card, etc.

What happens if someone has a gift receipt, but doesn’t want the cardholder to receive the credit?

If the gift receipt shows the cardholder used a Visa card to make the purchase, you can refund the gift recipient on his or her Visa card instead of the cardholder’s.

If the gift wasn’t purchased with a Visa card, you’ll have to offer an alternate form of credit (like cash, in-store credit, a gift card, etc.)

What will happen after I send the purchase return authorization request?

The cardholder’s bank will send you a response. There are several different codes and response descriptions, but they fall into just two buckets: approved and declined.

The following is the different codes you might receive and the suggested action you should take:


Code 00 | Approval

Finalize the refund and credit the account.

Code 85 | No reason to decline

Finalize the refund and credit the account.


Code 14 | Invalid account number or account type

Tell the cardholder that the bank doesn’t recognize this account. Ask for an alternate Visa card or offer a different form of refund (cash, in-store credit, etc.).

Code 39, 52, or 53 | Invalid account type

Ask the cardholder to verify the correct account type (debit or credit) was entered into the POS.

Code 54 | Card expired

Inform the cardholder that the card has expired. Ask if a replacement card has been issued. If not, ask for an alternate Visa card. If an alternate Visa card isn’t available, provide a different form of credit (cash, in-store credit, etc.).

Code 55 | Invalid PIN

Ask the cardholder to re-enter the PIN.

All other codes | Declined

Ask for an alternate Visa card or offer a different form of refund (cash, in-store credit, etc.).

Why would the cardholder’s bank deny a purchase return authorization request?

There are two common reasons why you might receive a decline message. The first is user error. If the cardholder has selected the wrong account type (debit instead of credit, for example) or entered the PIN incorrectly, you’ll receive a decline message.

The second reason is that the card you are trying to refund for the return transactions is no longer valid. This could happen if the card has expired, the card was lost or stolen, or the card was a prepaid account that is no longer in use.

What will happen if I don’t submit a proper authorization request? Or if I force-post the refund after a decline?

Both of these actions are considered non-compliant with Visa’s new purchase return authorization mandate regulations. There are two consequences of non-compliance.

First, you’ll pay more in fees. You’ll likely see an increase in Zero Floor Limit Fees and Visa Misuse Fees.

Second, you could receive more chargebacks. The cardholder’s bank could file a dispute with reason code 11.2 (declined authorization) or 11.3 (no authorization).

Do I have to change my refund policy?

No. As long as you are abiding by local commerce laws and you share your policy with customers at the time of purchase, your policy doesn’t need to change — just your processes. You still have the right to restrict or deny refunds, returns, cancellations, or exchanges.

What are the benefits of this new authorization process?

Your customer service department will likely receive fewer inquiries. Cardholders won’t need to ask when funds will be credited to their account. They’ll have more transparency and reassurance that action has been taken.

The increase in transparency will also reduce the risk of chargebacks with reason code 13.6 (credit not processed). Both cardholders and issuing banks will be able to see if a refund is in the works.

What are the drawbacks of these new Visa regulations?

Since you’ll be submitting more authorization requests, you’ll pay more in authorization fees.

Also, cardholders will quickly become accustomed to receiving real-time updates about their refunds. Any time that transparency isn’t available, cardholders could impulsively request unwarranted chargebacks.

For example, a cardholder arrives at your store with merchandise that needs to be returned. Wanting to make things easy, she opts for store credit when she can’t find her receipt. A week later, she sees the transaction on her statement, but there is no accompanying refund. Forgetting that she got store credit instead, the cardholder requests a chargeback.

You’ll want to take extra care to document each customer experience and interaction so if situations like these do arise, you can fight the chargeback.

Have More Questions?

If you have questions about the new Visa refund or return process, don’t hesitate to contact our team. We’re happy to help and want to make sure you receive all the benefits that Visa has intended.

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Jessica Velasco

Content Manager for Marketing

For nearly a decade, Jessica Velasco has been a thought leader in the payment dispute industry. She aims to provide readers with valuable, easy-to-understand resources.