Refund Handling: Card & Account Scenarios

This document outlines the behavior of the payment system when processing refunds for transactions where the shopper's card has expired, been updated, or the underlying bank account has changed.

Table of Contents

1. Card Expired or Removed
2. Card Updated, Same Bank Account
3. Card Updated, New Bank Account (Account Closed)
4. Handling RefundReversed Status

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1. Card Expired or Removed

Scenario: The specific card number used for the transaction is expired or invalid, but the underlying bank account is still active.

• Standard Behavior: In most cases, the issuing bank accepts the refund and routes the funds to the shopper's underlying account, even if the card number is expired.
• Successful Outcome:
  • Status: Refunded or RefundedAcquirer.
  • Verification: The shopper can use the ARN (Acquirer Reference Number), available in the merchant portal, to help their bank locate the funds.
• Failed Outcome:
  • If the bank cannot map the funds (e.g., the account does not allow routing or is strictly tied to the specific card number), the refund returns to the payment provider.
  • Status: RefundReversed.
  • Action Required: Process the refund outside of the payment platform (e.g., via manual bank transfer to the customer's new details).

2. Card Updated, Same Bank Account

Scenario: The shopper has received a new card (e.g., lost/stolen replacement), but their bank account remains open and unchanged.

• Standard Behavior: The refund is sent to the original card credentials. Since the bank account is open, the issuing bank identifies the account holder and credits the correct bank account automatically.
• Verification:
  • If the status is successful, no further action is needed.
  • If the shopper cannot see the funds, provide them with the ARN (Acquirer Reference Number) or transaction summary so they can trace the transfer with their bank.

3. Card Updated, New Bank Account (Account Closed)

Scenario: The shopper has switched banks, and the original bank account associated with the transaction has been closed.

• Standard Behavior: The refund generally cannot be credited.
• Result: The refund will be returned to the merchant account.
• Status: RefundReversed.
• Action Required:
  1. Inform the shopper that the automatic refund failed because the account is closed.
  2. Since funds have returned to your merchant account, you must process the refund outside of the payment platform (e.g., via manual bank transfer to their new account details).

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4. Handling RefundReversed Status

The RefundReversed status indicates that a refund could not be credited to the shopper (for any of the reasons above), and the funds have returned to the merchant account.

Summary of Actions

Scenario	System Status	Action Required
Account Active (Old or New Card)	Refunded / RefundedAcquirer	Provide ARN if the customer cannot find the funds.
Mapping Error (Rare)	RefundReversed	Contact shopper $\rightarrow$ Process manual off-platform transfer.
Account Closed	RefundReversed	Contact shopper $\rightarrow$ Process manual off-platform transfer.

Note: When RefundReversed occurs, always advise the shopper to confirm with their bank that the account is closed or inaccessible before arranging an alternative refund method.