The POS

Understanding Reversals, Refunds and Voids

Reversal Definition

Reversals are essentially the process of voiding a transaction before it has been settled. For example, you process a sale, but that same day, the customer comes back and says they want a refund. You proceed to refund the transaction, but it is considered a reversal since the original sale did not yet settle.

• When using the Authorizations app for example, a reversal is done if the payment has not been completed, regardless of how much time has passed since the authorization.
  • A refund is given if the payment has been completed through the Authorizations App.
• Reversals cannot be issued against card transaction types labeled as “Auth”. When the card transaction type shows “Auth”, it means the transaction has been authorized and has settled right away, without needing to close out your batch for settlement.
  • A refund would need to be completed against an “Auth” transaction.

Q: How do I tell which transactions were listed as “Pre-Auth”?

• Go to: Pre-authorized transactions
• A reversal can also be system initiated due to an error in the course of the transaction flow:

• • The transaction could have been disputed by the payment gateway (e.g. Clover) or the customer reported the transaction as fraudulent.
  • The transaction was disputed by the customer with their payment issuer because they feel they did not receive what they paid for in some way (most likely resulting in a Chargeback dispute).

Refund Definition

A refund transfers funds from your merchant account back to the cardholder’s bank account. Refunds are always associated with a transaction that has been authorized and settled, meaning the funds have already been transferred from the customer to the merchant account.

 

Refund by Transaction:
Refund by transaction shares the same authorization code between the original authorization and refund.

 

• Refunded transactions go through the typical settlement process, meaning as soon as the refund settles, the funds are sent back to the cardholder’s bank account. Though the cardholder’s bank may take a few days to deposit the funds back to the cardholder.
• Refunds against a transaction appear in Reporting app under Payments > Refunds.

 

Manual (Naked) Refund:

Manual or naked refunds are not linked to any previous transactions (or authorizations). When a manual refund is performed, a new authorization is created and then settles as a refund/credit for the cardholder.

• Manual refunds may be created for a number of reasons (i.e. original card no longer valid, courtesy refund for your customers, customer wants to refund amount back to debit card instead of refunding cash etc.).
• Manual refunds will appear in the Reporting app under Payments > Manual Refunds.

 

Merits of Refund by Transaction:
You can see the original sale and refund in Transactions app. When printing a receipt, both the original payment and refund appear.

Void Definition

Similar to a reversal, a void is a sale (Credit or Debit) that is cancelled momentarily after the sale has been authorized, but before the sale has been settled.

A voided transaction does not appear on the card holder’s bank statement, though it might appear in a list of pending transactions.

• This is known as an authorization hold, which will fall off the cardholder’s account in the timeframe set by the issuing bank.
• Some banks do not recognize void requests immediately. If the cardholder still sees the void after an extended period of time, the cardholder may call their bank; the bank should be able to see the void request and update the cardholder’s bank statement accordingly.

If a sale was voided accidentally and needs to be reprocessed, you can contact Support by clicking “Call Me” from the device or your Clover Web Dashboard.

 

Cause of Void
Voids can be user initiated by actually tapping the “Void” button at the end of the payment flow.

• If you wish to no longer give access to the Void button, you can manage employee permissions for this feature in the Employees App>Permissions Tab>Access Register>Void transactions right after payments (Disabling permission only available on Pro & Classic Bundles).
• If you tap the Reject button after signature is complete on a sale, the device will cancel/void the sale. Usually, on a Mini or Mobile, a prompt will appear first asking if you’re sure you want to void the transaction.
• If left too long on the Verify Signature screen without selecting Verify, a sale can time out, which causes the device to void the sale.

  NOTE

  The payment flow always needs to be completed for a successful sale (this includes tapping the “Done” button).

 

Timing can determine if a PIN Debit sale will be voided or refunded.

• If you are voiding or refunding a PIN Debit transaction fewer than 25 minutes after processing the transaction, the charge will be voided and will not be processed on the debit card.
  • This also means there will be no transaction discount rate applied to that sale amount.
  • If it has been more than 25 minutes since processing the transaction, the debit transaction cannot be voided. This means that a refund would be applied and it must be issued in cash.
• If you do not wish to issue a PIN Debit refund in cash, a manual (naked) refund may be completed.

  NOTE

  Clover Stations cannot perform a manual refund. If you have a Station-only account, you can contact Support by clicking “Call Me” from the device or your Clover Web Dashboard to have the refund processed.

Refund vs. Void

Refunds should be used in the case where a transaction has already been captured and settled.

 

EXAMPLE: You process a sale for $5. In most instances, if the sale has already been captured (authorized) and settled, this means that you’ve received funding for the sale.

A refund would have to be done so the funds are deducted from your merchant account and given back to the cardholder.

• Instructions for issuing a refund from the Transactions app: Click Here
• Instructions for manually issuing a refund on a Clover Mini or Mobile device: Click Here
• Instructions for processing a refund or exchange on a specific item: Click Here

Voids should be used when an authorization or charge has been made, but the transaction has not been settled yet.

 

EXAMPLE: You process a sale for $5. The sale has been authorized, but not yet settled, meaning your merchant account has not been funded for the $5 sale, as of yet.

When a refund is completed against a sale that has not been settled, the sale is then voided/reversed. Meaning that the $5 was never transferred to your merchant account for funding, instead it was reversed back to the cardholder’s account.

Refund vs. Exchange

A refund can be applied to the entire order or selected items within the order.

An exchange can be applied to selected items within an order, in order to exchange that item for an item of the same amount.

• If you need to exchange an item for another item that is less or more than the original amount, a return on those items would need to be processed and then a new order needs to be started.