Visa and MasterCard are now making it easier for a cardholder to know when a merchant issues a refund through a Purchase Return Authorization. Learn more about the new requirement, and how return authorizations will benefit your customers — and your customers’ customers.

What is the Visa and MasterCard Purchase Return Authorization?

As you’re aware, when processing a sale, merchants are required to obtain an authorization that gives approval to process that sale. 

Starting April 2020, for Visa and MasterCard purchases, merchants will be required to obtain an authorization for a return/refund.

Historically, returns and refunds did not require an authorization. Returns and refunds were simply processed when a batch was settled. 

What are the benefits of authorizing a return?

Authorizing a return has multiple benefits for the customer, as well as the merchant. 

For the customer, the main benefit will be the clarity they have into the refund being issued. The new return authorization process will improve their overall experience and help facilitate customer service inquiries related to the status of refunds.

The new return authorization process will give merchants the ability to check the validity of the card to process the refund. Merchants will also receive an approval or decline response code at the time the refund is being issued. This process will, in turn, reduce chargebacks and fraud by providing proof that the refund in now in progress.

Some Response Codes include:

Approved

Code 00 | Approval
Finalize the refund and credit the account.

Code 85 | No reason to decline
This can also be considered an Approval.Finalize the refund and credit the account. 

Declined

Code 14 | Invalid account number or account type
The account for this card is not recognized. Tell the cardholder that the bank doesn’t recognize the account. Request an alternate card of the same brand type (If the refund is on a Visa, then request an alternate Visa card. If the refund is on a MasterCard, then request an alternate MasterCard.)

Code 57 | Transaction not permitted to cardholder
This response code could be triggered due to a pre-paid card that doesn’t accept refunds.

When do these changes go into effect?

The Visa and MasterCard Purchase Return Authorization requirement is mandated by April 2020.

Available with the 7.2 release, functionality is built into our gateway to support this requirement. Currently, the functionality supports real-time Elavon transactions only. Additional processors will be added in a future release. 

As always, if you have any questions, visit the Support Hub or call us at 888.248.7060.