How to Comply with New Visa Requirements for Returns & Refunds

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:

APPROVED

Code 00 | Approval

Finalize the refund and credit the account.

Code 85 | No reason to decline

Finalize the refund and credit the account.

DECLINED

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.