When a consumer or business realizes there’s something wrong with a transaction soon after the transaction has been made, the business can cancel the transaction within its payment point of sale or control panel, voiding the transaction. For example, say you purchase a dress marked at $80 from a clothing store via a credit card terminal. Instead of typing $80 in the terminal, the salesperson accidentally typed $90 and already swiped your credit card. If done right away, the employee can void the transaction, essentially removing it from sales made that day. In this case, the void transaction won’t fully process and will eventually fall off the consumer’s account statement.
How Do Void Transactions Work?
If a transaction has been made in error or the consumer wants to cancel the transaction before it has been processed, the merchant can void the transaction. Fraudulent transactions that haven’t fully been processed can also be voided. By voiding the transaction, the merchant’s bank won’t pay the transaction, and the consumer’s bank won’t charge or debit their account for it. For that to happen successfully, the void must happen after the transaction has been authorized but before it has settled.
Authorization and Settlement
When you make a credit or debit card transaction, the merchant authorizes your payment. Authorization essentially confirms that you have a valid card and funds available for the transaction. Next, your transaction is bundled with several others, typically all those made on the day, and submitted for settlement. During the settlement process, the merchant’s bank, the credit card issuer, and the card network sort out payment and fees between one another and the merchant. Finally, once funds are deposited to the merchant’s account, the transaction is considered settled.
Void Process
Payment settlement can take one to two business days, leaving a small window after authorization for when a transaction can be voided. Consumers who notice a transaction that needs to be voided must contact the merchant directly to request the transaction be canceled. The merchant can then void the transaction within their point of sale, payment gateway admin interface, or control panel, depending on how the payment was received. Even if successfully voided, the void transaction may still appear as a pending transaction on the consumer’s bank or credit card online transaction list, and may hold a portion of the consumer’s balance. Fortunately, the void transaction should disappear within two to three business days and the funds held will be released. Once a transaction has been voided, the final transaction won’t appear on the cardholder’s bank or credit card statement. After voiding a transaction, merchants may be able to submit an authorization reversal, which releases the fund’s hold and makes those funds available again. For the authorization reversal to be successful, the card issuer has to support the transaction and the merchant has to submit all information correctly.
