Void Transaction

 

What Is a Void Transaction?

A void transaction is a transaction that is canceled by a merchant or vendor before it settles through a consumer's debit or credit card account.

Although a transaction may be void, it does not appear on the customer’s account statement. It may appear as a pending transaction when the customer checks their account online.

Note: 

  • A void transaction is a transaction that is canceled before it settles through a consumer's debit or credit card account. 
  • When a transaction is voided, it shows up as a pending transaction on the customer's account for a short period of time, while the process is being completed.
  • Void transactions are different from refunds, which are issued after the transaction has cleared through the customer's account.
  • Mistaken charges, incorrectly-charged merchandise, and fraudulent purchases are the most likely to be voided.

Understanding Void Transactions

When a transaction takes place, the merchant swipes the customer's debit or credit card. If there are enough funds in the customer's account, the terminal authorizes the transaction. But the transaction is not fully settled, as payment has to be released from the customer's account to the merchant.

If there is a problem with the transaction, it can be voided—even though it hasn't settled. Since the transaction is pending and has not cleared the customer's account, it means the sale can be prevented from going through.

In order to void the transaction, the customer must contact the merchant and request the transaction be reversed unless the merchant notices a mistake or issue and proactively voids a transaction at the point of sale. Once voided, the transaction will show up on the customer's account as a pending transaction, which disappears after a certain amount of time.

The hold can last anywhere from 24 hours to several days, causing the customer an inconvenience because they won’t be able to access the money during that time.

Special Considerations

Voiding Purchases

Mistakes can be easily corrected by voiding transactions if they are recognized immediately. For instance, a buyer may find they were charged incorrectly. A customer who has just paid for their items from a grocery store picks up their bags and realizes the cashier accidentally included some of the next customer’s items in their purchase. The cashier can void the transaction, re-scan the correct items, and charge the customer the correct amount.

Some merchants may allow a certain window of time to cancel a purchase. This often occurs with e-commerce merchants. A buyer often may have the option to cancel a purchase made online within 24 hours. If the purchase is canceled, the seller then voids the transaction, and the buyer is not charged for the purchase.

Voiding Fraudulent Transactions

Fraudulent charges can also be voided. Card issuing companies have fraud detection services to flag fraudulent transactions.

Most companies place these transactions on hold. The customer can verify whether a transaction is fraudulent with the company, which will immediately void the transaction. If a customer cannot be reached for verification, many card companies will automatically void a suspicious transaction before it is settled to ensure the safety and security of the customer.

Void Transactions Versus Refunds

Void transactions are different from refunds. With void transactions, no money is ever actually transferred from the customer’s debit or credit card company to the merchant. But refunds are issued after a transaction has settled and the customer has paid for the good or service.

Some merchants and credit card processing systems may actually settle transactions immediately. When a transaction settles immediately, the seller must issue a refund rather than voiding the transaction.

Unlike void transactions, refunds can take a much longer pass through to a customer's account. Some refunds take as little as 48 hours to reflect on a customer's account, while others can take as long as 30 days.


(Article source from: https://www.investopedia.com/terms/v/void-transaction.asp)

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