There are millions of credit card transactions that take place every day but not every transaction goes as planned. All merchants experience the occasional sale that will end in a payment reversal. The question in each case: how will the overturned transaction play out? How can one ensure to achieve the best result? It is important to understand what types of payment reversals happen, under what circumstances each takes place, and what the outcomes are for cardholders.
What is a reversal of credit card payment?
Today, most people tend to make payments for goods and services using their credit cards online or offline. Sometimes after making a payment, one might have to cancel the order or transaction because of some reason. When such cancellation takes place, the credit card issuer might reverse the payment.
A payment reversal is when a customer gets back the funds from a transaction. This process can happen in many ways such as customer disputes, authorization reversal, and sometimes also refunding the payment. Each of these reversals takes place at different stages of the payment process and for various reasons.
When is credit card payment reversal required?
Here are some of the transaction cases when you may have to opt for a credit card payment reversal:
- Unauthorised transactions
Any transactions that are not made or authorised by you or an additional cardholder may require reversal of payment.
Items on your statement that do not match the item amounts on your receipt.
Refunds or credits that have not been processed, or that were wrongly processed as debits.
- Faulty or defective goods
Sometimes you may pay for goods but do not end up receiving them or if they get delivered but are not as they were described to be or that reached you in a faulty or defective state. Such situations require reversal of credit card payment.
- Fraudulent transactions
A transaction that you believe was made fraudulently.
Transactions that were mistakenly charged to your account more than once.
- Cancelled auto-payments
A cancelled automatic payment is still being deducted.
- Unfulfilled services
Services that have not been rendered.
- ATM errors
An ATM withdrawal which dispensed the incorrect amount of money.
Charges for a reservation you made but cancelled within the cancellation period.
Ways to Reverse Credit Card Payment
Cardholders have many ways of reversing credit card payments. Such measures are measured below:
- Customer Dispute
You can file a dispute as a cardholder with the issuing bank. When a merchant receives a customer dispute it will have a reason code connected to it. The reason code explains the cause of the dispute, in other words, what the cardholder is claiming.
- Authorization Reversal
Authorization reversals reverse a payment before it officially goes through. If you notice something incorrect after submitting the authorization request, you can call your bank to stop the transaction from occurring. This is known as an authorization reversal, and it’s highly preferable over a future chargeback or refund. The further a payment gets along its path to completion and the more entities it communicates with the more of a hassle it is to take back.
In case something is wrong with the product you purchased then you can opt for a refund. Instead of just cancelling the transaction like an authorization request, a refund completes the transaction in reverse. It’s like the acquiring bank is now paying the business instead of the other way around. It’s treated like a new, separate transaction.
Ways to Receive Reversal of Credit Card Payments
- Cancellation of Purchase – As a credit cardholder, you have the option of cancelling any transaction that you may have made using your card online or at physical stores. You can either cancel the transaction directly or demand a chargeback. For direct cancellation, you must cancel the order and the payment will be reversed in their bank account within 30 minutes. A chargeback is a way through which you can cancel your purchase if you are not satisfied with the service or product you bought. In this case, the banks will reverse the amount to the credit card and will not pay it to the merchant. You must place chargeback requests within a period of 180 days, starting from the date of purchase.
- Online Refunds - When you make an online payment for a product and then cancel your order, you may get a refund of the full payment. Before purchasing you should read the returns and refunds policy of the merchant you are making the payment to. Every merchant has its own refunds policy for cancelled orders. There are some websites that do not provide refunds, some have conditions on refunds, some provide points as refunds instead of cash and there are some websites that provide the full refund for a product without asking for a reason.
- Double Swipe – In case you swipe your credit card at a store and receive an SMS saying you have been charged, but the machine does not provide a charge slip, then the store owner may ask you to swipe your card again. In such cases, you end up paying twice for a product because of a glitch in the machine. If you report such incidents to the bank, then your bank will forward details about the same to the merchant and ask them to accept the reversal request.
Credit cards offer a lot of conveniences, but they also come with certain technology-related problems which may require reversal of credit card payment. As easy as it may sound, you as a cardholder would still have to go through the process of reversal of payment. Despite the hassle, what you can be assured of is the payment coming back to your account in case of any glitch. As narrated in the article, there are smarter ways to approach this and save time as well as efforts in the process.
1. How long does a person have to cancel the credit card payment?
A person or a bank has a period of 60 days to cancel a credit card payment.
2. How many days does a credit cardholder have to reverse a payment?
A cardholder usually has about 40 days to reverse a payment.
3. Can a pending transaction be cancelled?
Yes. A pending transaction can be cancelled at any time before it is executed by the merchant. If the transaction is approved, the customer will have to contact the merchant and the bank or lender to resolve the issue.