Merchant Update: Visa to Require Online Authorizations for Refunds
Update: Following publication of this post, Mastercard announced it will also require authorization on refund transactions effective April 2020.
As of 2019, Visa will require issuer authorization on refunded transactions. This is a Visa-only change, which will be implemented in two phases. Large merchants in the U.S. will need to begin the practice in October 2018, while everyone else must make the change by April 2019.
The driving factor behind the change? Consumers have real-time access to their banking information, but there’s no visibility on refunds until they post to the account—days or a week later, unlike with a sale (which has a pending status right away, until it posts).
The change is good for merchants too, since customers will be able to see their refund in a pending-authorization status until the issuer posts it.
Since the change is currently Visa-only, there will be a different experience for both consumer and merchant when it comes to Visa and the other card brands. However, Discover has announced that they’ll support the same functionality as of October 2018, and intend to mandate it effective April 2019.
The good news for PaymentSpring customers: most of this will be done for you behind the scenes.