Can Stores Refund To A Different Card

The last time that you returned something to a store, the chances are that they asked to see your method of payment. In particular, purchases made with credit and debit cards usually involve a refund issued to that card. And while a store clerk can technically issue a refund to a different card or give the cardholder cash, the chances are that they won’t.

Let’s take a look at the reasons why merchants generally won’t refund to a different card.

Technically, it’s possible

As The Points Guy says, refunding a different card is possible. At the most basic level, a credit card refund is a negative dollar charge placed on the card. The process is essentially the same, with a card swiped or inserted into the terminal to process a POS transaction or using the same acceptance system as your mail order payments.

However, refunding a different card from the original purchase is frowned upon, and emergent will likely only do it if there’s no other way to finish a return transaction.

Why refunding to a different card is a bad idea

There are many reasons why stores will generally refuse to issue a refund to a different card than the one used for the purchase. Some involve accounting, while others protect their merchant accounts and prevent losses.

There is potential for fraud

Perhaps the biggest reason merchants will not refund to a different card is the potential for fraud. For instance, a customer could buy something with a stolen credit card and then try to get a refund with a different card. If the fraudster receives a refund with the same stolen card, then the customer whose identity was stolen gets their money back.

On the other hand, is the fraudulent purchase is refunded to a different card, then the fraudster profits from the return. Worse, the merchant may lose their money twice — once when they give the fraudulent refund and again when the cardholder issues a chargeback.

It’s harder to track the money

A transaction report is generated for the merchant when a customer pays with a credit card. Typically, the transactions will show up on the merchant account statement at the month’s end, including payments and returns.

Typically, a purchase made and returned in the same statement cycle will show both transactions, which add up to zero. If the return happens later, the merchant’s accounting software will still be able to match the credit and debit transactions.

Why does this matter? Not only does having matching transactions make accounting easier, but it also means that a merchant can confirm that they’ve given a refund for a purchase. Then, if there is a dispute later, it’ll be easier for the merchants to avoid losing their money twice.

Credit card companies discourage the practice

There are a couple of reasons for this. Perhaps the biggest one is the potential for fraud, which we’ve already talked about. But the other reason has to do with rewards points and loyalty bonuses.

Normally, customers who buy something on their credit card and then return it will lose any credit card points. That’s because those points or rewards come from the merchant fees charged to a business; without those fees, the bank can’t pay out the rewards.

It may be against the merchant agreement.

Finally, many merchant agreements restrict or prohibit crediting a different card from the one used. For instance, in the case of Visa, you may be able to use another card for the refund if the merchant account refuses to refund the original card. However, this is a rare occurrence.

Final thoughts

It is possible to refund the purchase price to a different card. However, this is a bad idea for the merchant in almost every case. And while merchant agreements may allow such refunds under limited circumstances, most stores won’t do it even then. Instead, they’ll give a merchant credit.

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