What is a Card Refund Transaction?
A card refund transaction is not necessarily linked to an original purchase transaction and it debits the merchant account and credits the customers card, which is an acceptable transaction when a customer has made a purchase and at a later point returns the item for a refund. A card refund transaction poses severe risk to your business and could essentially provide an open cheque book to criminals if used fraudulently.

What is a Reversal?
A reversal is linked to an original purchase transaction and can be processed on the same day as long as the original purchase transaction is still in the batch and that batch has not been closed or banked.

[Please note that these high-risk transactions are also protected with terminal passwords which should be kept secret at all times and changed regularly.]

What is the Risk?
A refund transaction can pose a huge risk of fraud to your business.
Refund fraud can occur when a terminal is used to process an invalid or fraudulent refund to a fraudsters card, usually in conjunction with staff that know the terminal password.
There are also instances where criminals remove the credit card terminals from merchant’s premises and obtain the terminal password from merchant’s employees in order to process refund transactions.
The theft of a terminal causes merchants to incur a financial loss due to the loss of the terminal but can cause much more severe financial implications if the criminals are able to process refund transactions on that terminal.

How to Protect Yourself & Your Business

  • Unless absolutely essential, do not activate the refund and reversal functions;
  • Conduct routine, daily audits of your credit card terminals and ensure all are accounted for;
  • In the event of a faulty or missing terminal, immediately notify your Acquiring Bank or Dashpay;
  • Choose secure and robust terminal passwords and keep these confidential and on a need-to-know basis;
  • Change your supervisor terminal password for the refund and reversal functionality (where applicable) often and routinely;
  •  An alternative to card refunds is EFT or cash refunds, which can be better controlled.

The above points should be used as good business practice on all your terminal devices as the norm.