Online transactions have made life quite easy. We transfer funds, buy things and pay for them, receive payments, and all of this with the simple click of a button. Cash is rarely required anywhere. Online or cashless payments have become quite ordinary. The only time that online transactions frustrate us is when our money gets stuck! But like most out of the ordinary things, we must regard it as an exception.
Most online portals have simple refund policies. The process of raising a refund request is quite convenient; however, there are instances when the process is delayed due to some reason. In order to better understand this process, let us look at detailed insights.
When does the need for a refund arise?
- When you make an online purchase and pay through your card but later decide to cancel or return the ordered item
- When you are in the middle of making an online payment and you lose network connectivity
Why do payments fail?
- Failure in communication – At some point in the payment making process, if there is a failure in communication after the customer has been charged, the customer can ask for a refund. This usually occurs in most cases due to network or connectivity issues and is a rather common occurrence.
- Failure in a status update – Another reason for the failure of payments is the status of payment not getting updated. In such a case, even though the payment has been deducted, one or more of the banks involved fail to update the status. Since the payment gateway has no information, no information is available to the buyer or seller.
Why getting refunds takes time?
Firstly, the merchant usually needs a certain amount of time to determine whether the request for refund is legitimate or not. In cases where goods are returned, the merchant would like to make sure that the goods have not been damaged by the other party.
Secondly, the banks have a vested interest in keeping your money with them for as long as it is legally possible as they make interest off of that money. That is part of the reason why the bank charges your account immediately while delaying the refund to your account. In these cases, the merchant is able to provide the customer with an authorization code that can be used to hasten the refund process with the bank.
Thirdly, refunds take time because there are multiple online payment platforms involved. The process of authorization can be quite cumbersome. A slight delay at any stage further delays the entire process. To explain the refund process further, let’s take an example.
A customer raises the request for a refund. This request will be made to the payment gateway involved. The payment gateway then sends a request to the acquiring bank with which the merchant has an account. After the necessary approvals, the acquiring bank raises a request with the customer’s issuing bank. The entire process of authorization and re-authorization, despite the fact that no actual money is transacted, is a tedious one.
The bottom line
It is important to maintain your calm and understand how the process of refunds works. The movement of money in an online transaction, while faster, is sometimes hindered due to the complexity of the process. The entire process of online payments is monitored by the online payment gateway, the issuing bank, and the acquiring bank.
It is really up to the banks to approve and reflect the balance in their respective accounts. While no money is actually moving, the coordination between the two banks and the gateway determines the amount of time that the entire transaction takes.