The fast nature of Businesses in making transactions with their credit cards has become inevitable for reversal of payment to occur.
Currently, more than 1 million businesses are carrying out daily transactions. Understanding how payment reversal works will save you from several business hassles.
Therefore, in brief, a payment reversal is sending particular money back to the cardholder’s account. Payment reversal can be done by the cardholder bank, or the merchant itself.
There are several reasons why a merchant will have to engage in a payment reversal, probably, when there exists a payment error and thereby, the customer was debited but no payment invoice.
Or a case, where the merchant has failed to deliver the ordered goods, then the merchant must refund the money back to the customer.
However, if the merchant does not seem to be providing the money back, then you can apply for a chargeback, by disputing such Charge, as well as stating your reasons for the dispute. This method will involve the credit card holder.
Therefore, in this article, I will be showing you everything you need to know about payment reversal.
What Does Funding Reversal Mean?
Funding Reversal doesn’t have one meaning, it can be applied in different contexts, and each context of its application seems to have its appropriate meaning.
Each Payments reversal has its own rules for reversing a payment, some can have a great cause on the merchant, while for others, the cause may be lesser.
Therefore, in a general notation a payment reversal, is a situation in which funds from a transaction are returned to the cardholder’s bank account.
There are several forms of payment reversals, and I will be explaining each form shortly.
- Authorization Reversal
This is one of the fastest and easiest ways of getting a payment reversal to your account. Authorization Reversal is devoid of several fees that might be attracted when trying to apply for a refund of money or Chargeback.
This process involves authorizing the bank to reverse a payment that has been recently made by you or by the merchant.
Let’s say, you have just sent some amount of money to someone and figured out that it was a wrong account, you can simply authorize the bank to reverse the payment back to your account.
Some banks might provide you with a physical form to fill out regarding information about the transaction you have made.
Other cases where an Authorization Reversal is done, is between the merchant and bank, probably, when the customer has been charged twice, or an error in the system has resulted in extra charges for the customer.
Then the merchant can simply authorize the Bank to reverse the payment back to the customer with immediate effect, this method also won’t attract any charges from both parties involved.
This is also another means of getting a refund of money. While the authorization Reversal implies the merchant or the customer directing the bank to reverse a payment.
In the case of a refund, the merchant will have to engage in a separate transaction as a refund of money.
If after you experienced some payment error, or rather, the goods ordered weren’t delivered, then you can simply contact the merchant to make a refund of Money.
The merchant will therefore transact the exact amount back to your payment account. This method can be a loss to the merchant because transaction fees are paid by the merchants themselves.
Let’s say you sent some amount of money to the wrong account, and probably after some time, you saw that you were credited with the exact amount from the same person.
Then simply, the person has refunded back the money to you, which may not always happen in all cases, then you can request a chargeback, by involving your bank.
This is the most costly method of getting a refund and is likely to take longer to get refund of money.
If the merchant has refused to refund your money back, then you can simply file a dispute for such transaction, in the request for a refund of money back to your account.
A chargeback is a process, where the bank or the card issuer is forced to take money from the merchant’s account and gives it back to the customer.
The process of a chargeback is guided by the Fair Credit Billing Act, the following are reasons why you might want to request a chargeback from your bank:
- Ordering a product from a merchant and not getting it received.
- Transaction Error, debited twice from a merchant payment system as a result of a network glitch, or whatever that might have caused the double debit.
- Card Fraud, is when you identify a payment not authenticated by you, or therefore, have been a victim of identity fraud.
To request a chargeback, you need to contact your bank or rather, you can dispute a charge online, by locating the transaction.
Almost all financial institutions offer chargeback services. Once you dispute a charge, the merchant will be requested for certain information by your bank, where the merchant is given about 10 – 15 days to provide the necessary information.
These documents will help make investigations regarding the Charge, after the investigation which can take up to 120 days, you will get a refund of money back to your account.
How Long Does a Funding Reversal Take?
The time frame taken by funding reversal depends on the method of reversing a payment, however, the Authorization Reversal seems to take a shorter time to get a reversal, therefore, in a space of 25 days you should get your money back to your account.
In the case of refund and chargeback, this might take longer, because of the process involved, therefore, you can get your money back to your account, once you are cleared.
The duration also depends on the magnitude of the refund.
What Does Reverse Funding Mean?
Reverse Funding is simply the process of refunding some amount of money back to the buyer, probably after some error had occurred in the transaction, and the customer has been debited, or rather not getting the ordered product.
The merchant has to authorize a withdrawal or refund the money back to the customer, in the case where the merchant is not ready to refund the money back, then, the customer will have to request a chargeback.
Can a Bank Reverse a Payment After It Has Been Posted?
Yes, A Bank can reverse a payment after it has been deposited, however, before a bank reverses the payment, they will have to contact the person who had received the money.
If you need a reverse of money, you can simply contact the person to who you had sent the money, and refund your money back to you.
Funding Reversal is a common terminology in the business world, not only does it have an effect on how transactions are made between a merchant and a seller, but it also provides the customer, in questioning every charge.
Therefore, in this article I have explained the three forms of funding reversal, each form has its process, and some might take a longer time to get a refund but can be more effective.
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