Seeing the two terms, refund and reversal, one might think they are the same, they have the same meaning but that is all wrong. The two terms differ and that is what I’m here to clear, the major difference between refund and reversal transaction.
I will try to explain this in a simpler way that all will understand and comprehend.
What is the difference between refund and reversal transaction
The major difference between refund and reversal transaction is that in refund money has already been paid to the merchant as the transaction is deemed complete, while in reverse the transaction is yet to be completed and the seller hasn’t received the payment.
To further explain the difference between the two terms, I will explain what refund and reversal are all about.
What is refund
A refund is a process whereby a customer request from the merchant or seller the money paid for a product which the customer isn’t happy with or felt that the transaction was a bad one.
In a refund, a transaction is already completed and money paid to the seller or the merchant. However, if the buyer or the customer sees that the product or services are not like it was advertised or probably bad, the customer will request a refund.
In this case, the customer will not contact the bank, but rather the merchant or the seller, or the business in terms of online stores. Prior to making the refund, the merchant will get lots of evidence from the customer or a valid reason to refund the money.
All things being equal, the merchant will refund the customer. This is one major difference between refund and reversal transaction. Here the merchant is at a loss because he or she has already counted the customer’s order as one of the profits made because the transaction is complete and money paid to his or her account.
On the other hand, a refund can be so painful for the merchant or the seller. This is why some sellers don’t offer a refund though I don’t buy this idea at all. If you don’t offer a refund, I will skip you and move to another merchant.
AN EXAMPLE
Let me use Aliexpress or the Amazon store for an example. You bought a mobile phone from Amazon and which you already paid for before the product was delivered to you. On receiving the order, you saw that the product was defective or probably not as it was advertised, the next action you will take is to return the product and request for a refund.
In this case, you will immediately contact aliexpress, Amazon, or the seller that you’re returning the product, and they should refund you your money.
This is the line I want you to know, the difference between refund and reversal transaction. In refund, you will contact the seller or the merchant only, while in reversal you will contact both the seller and your bank.
If the seller or merchant sees that you are right in returning the product, the merchant will refund you your money. The refund will go directly into the account or means you used in making the payment for the product or services.
HOW LONG DOES REFUND TAKE
Generally, refunds usually take two to ten working days though in some situations it can take up to twenty days to refund your payment.
Every seller has it refund policy so you should endeavor to know a merchant or seller’s refund policy before making an order.
There are two things you will take from this in order to know the difference between refund and reversal transaction. In a refund, the transaction is completed, money paid fully to the seller or the merchant, while it is not the case in a reversal transaction.
Again, in a refund, you will contact only the store or the seller to refund you the payment you made, because of bad products or services rendered to you. In a reversal transaction, you will contact both the merchant and most importantly the bank to cancel and reverse the payment.
I will talk more about that on reversal transactions.
What is reversal transaction meaning?
Reversal transaction meaning is the process whereby a transaction is initiated but didn’t go through the process of completion before being canceled either by the seller or the customer.
A type of reversal I will be using is the authorization reversal.
Authorization reversal is the process whereby a customer quickly requests or asks the bank to cancel a payment immediately after making the payment. Authorization reversal is something that needs to be done in a quick session so as to prevent the completion of the transaction.
This type of reversal usually occurs when there’s a mistake in the account details of the payee or probably a technical issue with the bank. Immediately the payment is made, the money paid will be reversed back to the payee’s account.
Looking at the major difference between refund and reversal transaction, you will see that in a refund, money has already entered into the seller or the merchant’s account. While in reversal, money is yet to enter into the seller’s or merchant’s bank account.
In reversal, you need to contact your bank in order to reverse a payment made especially if the payment was not successful but you got debited.
This has occurred to me twice while using PayPal to make a payment. The payment was not a successful one, but I got debited and it happened twice. I immediately contacted the merchant and he said didn’t receive the payment, so I immediately contacted my bank and asked for the payment to be canceled and reversed.
Within the space of 32hrs, the money was reversed back to my account.
In most cases, if you didn’t contact your bank and the payment was not a successful one, the bank will automatically reverse the money as long as the merchant or the third party didn’t receive the payment.
Another major difference between refund and reversal transaction in this aspect is that refund can take up to two weeks to refund the money back to the payer, while in reversal, it takes a maximum of three days to reverse the payment.
This is so because the merchant or the seller didn’t receive the payment in his or her account, and the payer will get the money lot faster compared to a refund of the money.
Another difference between refund and reversal transaction is the fact that the merchant is at lost in the refund and it can be annoying and demoralizing when customers request a refund.
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To sum up the difference between refund and reversal transaction
1. In refund, the payment transaction is complete and money paid to the seller or the merchant’s account. In reversal, the payment transaction is not complete and the merchant is yet to receive the payment to his account.
2. Reversal takes a maximum of three to reverse back to the payers or customer’s account, while refund takes up to two weeks or even twenty working days to refund the customer back the money.
3. In a refund, the payer or the customer doesn’t have to contact them back for a refund, but rather the merchant or the seller. In reversal, the customer needs to contact the seller if to know that the transaction is complete and contact the bank to cancel the transaction and reverse the money back to the account.
Now you have seen the difference between refund and reversal transaction, and also payment reversal definition, let’s move to the others.
what does reversal mean on a credit card machine?
A reversal mean on a credit card machine is the process by which funds or money is returned back to the payer’s account. That is to say that the payment wasn’t a successful one, this, in turn, will make the payer request for the payment to be canceled and reversed.
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Can a bank reverse a payment
Absolutely yes, a bank can reverse a payment when a customer or probably the payer request that the payment made should be canceled immediately and money reversed back to the account. After the payment is canceled, the bank will in turn reverse the payment back to the payer’s account.
However, once a transaction is very much complete and the merchant has received the payment to his or her account, the bank can no longer reverse the payment. It is left for the payee to ask for a refund from the merchant or the seller.
How long does it take to reverse a debit card transaction
It takes a maximum of three working days to reverse a debit card transaction back to the payer’s account, while in a refund, it takes a maximum of twenty working days to refund the payment. Though in terms of refund, each merchant has it refund policy and the number of time or days to refund a seller back the payment made.
And this is one of the major difference between refund and reversal transaction.
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Can a merchant reverse a refund
A merchant cannot reverse a refund because once a refund is made, it is already permanent and can’t be reversed. The only thing the merchant will do is to charge the customer through the customer’s debit or credit card.
If a merchant sees that he mistakenly refunded a customer his or her payment, he can’t reverse the money cause it is already received by the customer. What some will do is to contact the customer and request from the customer to transfer or pay the amount back to their account.
In some cases, the merchant will charge the customer through the bank account information of the customer. For example, you signed up for Amazon or aliexpress and entered your bank account details or information. In this case, they will charge you through the debit or credit card information you entered on your personal profile.
If to say a merchant can reverse a refund? I’m sorry that is not possible as the refund is already permanent, and received by the customer.
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This is where I come to the conclusion of this post on the major difference between refund and reversal transaction. That is a refund transaction is completed and money paid to the merchant, while a reversal transaction is not completed and money is yet to be paid into the merchant’s account.
If you have more to add to this, I will appreciate it a lot more. Please don’t forget to use the share buttons to share this post on the difference between refund and reversal transaction.