How Do Refunds Work? How to Do a Refund on a Card Machine

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Issuing a refund on a card machine is a relatively easy process, but it will vary slightly depending on the card machine and the card used in the transaction. Which of your accounts the returned money will come from, and how long it will take to reach your customer, will also differ depending on your merchant account provider.

While browsing for the best card machines, it’s likely that you’ll be looking for the ones that take payments faster. However, practicality when refunding is also worth considering when choosing a provider. After all, issuing a refund is as much about complying with the law as it is about giving excellent customer service – both are key factors when it comes to maintaining the reputation of your business.

In this article, we’re going to explain how to issue refunds, the ins and outs of the refund process, and give you tips on how to write a refund policy.

How to Issue a Refund on a Card Machine: Three Easy Steps

The exact process to issue a refund on a card machine will depend on your card machine provider and the model you use. However, it will usually boil down to these three steps:

1. Check the proof of purchase and product’s condition

Before you issue a refund, it is important to check if it is indeed your responsibility. The Consumer Rights Act 2015 states that a customer has 30 days to return items that are faulty, unfit for purpose, or not as described, and get a full refund.

When a customer requests a refund on that basis, it’s good practice to ask for proof of purchase. This will help you establish if – and when – the item was bought from you. A sales receipt or a bank statement could serve as proof of purchase, for example.

Moving forward, when you have access to the returned product, check its condition to see if it’s consistent with your customer’s claim. If you find signs of damage and significant wear, these may invalidate the claim, though you can offer the refund anyway at your discretion.

2. Locate the transaction and verify the refund

If you use a traditional card machine, such as one supplied by Ingenico, it’s likely to be integrated with your point of sale (POS) system. If this is the case, you’ll need to locate the relevant transaction on the system before actioning a refund. This varies according to each system’s setup, but you can usually do it by entering the customer’s order number. If your receipts come with a QR code, scanning it will also lead you to the transaction.

However, if you use a card machine powered by an app, like the Square Reader, you can search the app’s transaction history to find the one you’re looking for. Again, this varies according to the app you’re using. To search for a specific transaction on the Square app, you’ll need to:

  • Click on the “transactions” tab on the app’s main page
  • Scroll down the list or use the search bar to find it. For the latter, you can search by card number, phone, customer name, receipt, notes, or item. Once you’ve found the transaction, click on it.

3. Process the refund

To process a refund on a traditional card machine, such as an Ingenico iWL250, you’ll need to:

  • Press “menu” on the ready screen
  • Select “refund” and press “enter”
  • Type in the amount to be refunded and press “enter”
  • Have the customer present their card by swiping, inserting, or tapping
  • Enter your supervisor code and press “enter”
  • Tear off the merchant receipt printed, keep it for your records, and press “enter”
  • Tear off the customer receipt printed, hand it to your customer, and press “enter”. The refund is complete.

With app-powered card machines, the refund is processed through the app. To issue a refund on a Square Reader, you’ll need to:

  • With the transaction open, click on “issue refund”
  • Click “refund all items” for a full sale refund, or choose the specific items if you’re only offering a partial refund. Alternatively, click “amount” and type in the specific amount to be refunded.
  • Once you’ve selected what – or how much – is being refunded, click “next”
  • Choose between refunding to the card used in the transaction, or if you’re issuing a gift card
  • Select a reason for the refund
  • Click “refund”. The refund is complete.

How to refund on a card machine without a card

Most traditional card machines won’t allow refunds to be made without the presence of the original card used in the transaction.. You can counter this by offering your customer a gift card, which will allow them to have that amount in credit without you having to process this through the card machine.

However, app-powered card machines, like Square, Zettle, and SumUp, allow you to process the refund entirely through their relevant apps without the need for the original card.

How long does a card machine refund take?

Card machine refunds usually take between two to five working days to show up on your customer’s account. However, some refunds can take up to 30 days to be processed, depending on your customer’s bank, the type of card they used, and the country the card was issued.

This extended time is due to the fact that card transactions involve several payment platforms, and requesting their authorisation for the return of your customer’s funds can be a lengthy process. We recommend that you inform your customer of this at the start of the process so as to manage their expectations.

Is the refund taken from my business bank account?

Some providers, like Square, Stripe, Worldpay, and Barclaycard, will take the refund straight from your bank account. Others, such as Zettle and SumUp, can only take it from recent transactions that haven’t entered your bank account yet.

Depending on your sales volume, you may consider using this information to choose your card machine providers. For example, if your business doesn’t process a lot of daily transactions, pick a provider that allows you to refund from your bank account. This way, you’ll always be ready to action a refund for a customer.

How much will I be charged for refunds?

Normally, card machine providers don’t charge specific refund fees, but they do tend to keep the card processing fees of the original transaction. When comparing merchant account fees, we found this to be the case with Square, Stripe, and Worldpay. On the other hand, Zettle and SumUp, refund the processing fees of the original transaction back to you, which is a plus.

However, depending on your payment method, some providers, like Stripe, do charge a refund fee. They’re meant to compensate the financial companies for moving the transaction back and forth. This will usually cost you around 3 to 7p.

Tips for writing a refund policy

Having a refund policy is a great way to manage customer expectations and reduce the risks of unwarranted claims. It makes your business more trustworthy and sets clear rules for refunds. To help you out, here are our tips for writing a refund policy.

Set clear return conditions

Create a list that stipulates the conditions that need to be met for a refund, including proof of purchase, label and tags being kept, item being unused, and original packaging is kept.

List any exceptions

If there are items that can’t be returned, such as on-sale, personalised, or perishable goods, make sure this is clearly stated.

Establish a return window

It’s important that you establish a return window in your policy. Firstly, because some card machine providers may limit the time period for refunds. Square and Stripe will give you three months, while Zettle and SumUp give you a year, for example. Secondly, if you plan on reselling a returned item, the longer it’s outside your premises, the lower its value. Most retailers offer between 14 days to 30 days.

Explain the refund process

Explain your refund process to your customers so they know what to expect. Cover how long it might take for them to receive their funds, and where they’re expected to appear. If they’re due any charge as part of the process, make sure you mention this as well.

Avoid misleading your customers about their rights

It’s a criminal offence to mislead customers about their rights, so make sure that your policy doesn’t contradict UK law.. To that end, avoid expressions like “no refunds given” and “sold as seen”. To be extra cautious, it’s good practice to state that the policy is offered in addition to their statutory rights.

Do you always have to give a refund?

You don’t always have to give a refund when asked. The Consumer Rights Act 2015 states that a refund is due if goods are faulty, unfit for purpose, not as described, or if the seller had no legal right to sell them.

On that note, you can refuse to give a refund when the customer:

  • Knew an item was faulty when they bought it
  • Damaged an item by trying to repair it
  • Bought an item in the wrong size or colour
  • No longer wants an item

It’s worth noting that, if you sell your items online, by telephone, or off-premises (like in your customers’ home), the Consumer Contracts Regulations 2013 states that your customers can return (and be refunded for) an item up to 14 days after the transaction. In this scenario, they don’t have to provide a reason and the item doesn’t need to be faulty.

Next steps

If you need to issue a refund on a card machine, you must verify the purchase, check if the item is eligible for return, locate the transaction, and, finally, action the refund.

The steps you’ll need to follow for a refund will depend on your card machine provider, as well as the model you use.

If you don’t have one already, check our best card machines ranking. In it, we cover and compare the features of the best models as highlighted in our market research. This in-depth study will be able to help you pick the right card machine for your business.

How do you do a card machine refund over the phone?
You can normally do a card machine refund over the phone by processing the refund as normal, and then typing in the customer’s card details when the card machine prompts you to present the card.

If you have an app-powered card machine, the whole refund process will likely be the same as one done in-person. This is because, in this case, the refund will be issued through the app and you won’t usually be asked for cards when processing the refund.

Can a refund be made to a virtual card?
Refunds can be made to virtual cards. If the original transaction is located, most card machines will allow for it to be refunded.
Can a refund go onto a different card?
Refunds must always go to the card used in the original transaction, as required by the current anti-money laundering legislation.
Written by:
Lucas Pistilli author headshot photo
Lucas is a Brazilian-born journalist and Expert Market’s go-to writer for all things EPOS systems, merchant accounts, and franking machines. Having covered business, politics and technology for many years, he’s driven by his passion for the written word and his goal to help people make well-informed decisions.