The Program: Visa will require merchants to support authorization for credit/refunds transactions. This will enable the credit/refunds to be visible real-time on cardholder communications as a pending transaction, providing better visibility into the refund status.
The Change: Visa announced a phased approach for merchant required support of the purchase return authorization message as outlined below:
- Merchants must ensure the data fields below are included for return authorizations and must be submitted with a processing code of “20” in order to properly identify as a credit/refund transaction. Any additional data fields submitted by merchants may be reviewed by the issuer for authorization decisioning and may result in a decline.
- Primary Account Number
- Processing Code- 20
- Transaction Amount
- Transaction Date
- Merchant Type (MCC)
- Country Code
- POS Entry Mode
- POS Cond Code
- Card Acceptor ID (Merchant ID)
- Card Acceptor name and Location
- Currency Code
- Terminal Type
- Terminal Entry Capability
- Field 55 ICC Data/EMV Data (when applicable)
- Merchants should prepare to add the approval code on their receipts as a best practice for credit/refund transactions. Visa is planning to update their rules to require the approval code on receipts. The credit/refund authorization request will be displayed to the cardholder as a pending credit/refund when approved by the issuer. The credit/refund settlement transaction will continue to be used by merchants, acquirers, and issuers to return the funds back to the cardholder.
- The credit/refund authorization request will be displayed to the cardholder as a pending credit/refund when approved by the issuer. The credit/refund settlement transaction will continue to be used by merchants, acquirers, and issuers to return the funds back to the cardholder.
Phase I – Effective October 2018
Merchants that meet the annualized minimum refund volume as outlined by region below are required to support the purchase return authorization message in Phase I, effective October 2018.
| REGION | ANNUALIZED VISA CREDIT/REFUND VOLUME MINIMUM |
| U.S | USD $10 MILLION |
| CANADA | USD $5 MILLION |
| AP | USD $1 MILLION |
| LAC | |
| CEMEA |
Phase II – Effective April 2019
All remaining merchants in all regions will be required to send an authorization for all credit/refunds in Phase II, effective April 2019. Merchants are permitted to adopt the earlier Phase I effective date. Airline merchants have the option to delay implementation until April 2019.
Effective April 13, 2019 Chargebacks
Credits/refunds/purchase returns that do not receive a valid authorization may be charged back by the issuer using VCR code 11.2, Declined Authorization and code 11.3, No Authorization.
Effective July 1, 2019 Fees
Credit vouchers will be included in the Zero Floor Limit “non-authorized settlement” and Authorization Misuse Processing Integrity Fee Assessment.
Visa Rules will be updated effective April 13, 2019 with the following clarifications and updates to the credit refund processing requirements:
- Merchants must first attempt to process a refund (credit transaction) to the same Visa account that was used for the original purchase transaction.
- Clarify the circumstances under which a merchant may choose to process the refund onto a different Visa account (along with proof that the original sale took place on a Visa account), as follows:
- The original account is no longer available or valid (e.g., the original card has been replaced due to expiration or being reported lost / stolen, or was a Visa Prepaid card that has since been discarded).
- The authorization request for the credit transaction was declined.
- Clarify the scenarios where a merchant is permitted to offer an alternate form of credit (cash, check, in-store credit, prepaid card, etc.) when a refund cannot be processed to the original Visa account or to an alternate Visa account, because of one or more of the following conditions:
- The cardholder does not have a receipt or other proof of purchase from the original sale.
- The refund is made to a recipient of a gift (instead of to the cardholder who made the original purchase).
- The original sale took place on a Visa Prepaid card, which has since been discarded.
- The authorization request for the credit transaction was declined.
- Clarify that a refund to a Visa account must only take place when the original purchase took place on a Visa account, i.e., if the original purchase was made with a non-Visa method, such as cash or a non-Visa general purpose payment card, then the credit transaction should be an original credit transaction.
- Remove the requirement for a merchant to identify the original sale on the refund transaction receipt.
- Globalize the existing regional rules requiring refunds to be processed within five calendar days from the refund transaction date.
None of these changes affect a merchant's ability to establish its own refund/return policy, which includes the ability to refuse or restrict refunds, returns, cancellations or exchanges; provided that the policy is disclosed to the customer at the point and time of purchase.