How Long Does A Merchant Refunds Take?

Refunds are a part of the e-Commerce business. Whether you sell on your own website or via an online marketplace, there will be some customers who aren’t satisfied with their purchase and decide to get their money back. This is perfectly normal and can be expected as long as your products have a clear return policy and don’t include any hidden charges. However, when it comes to refunds, not all businesses handle them the same way. If you sell online, you should be aware of how long does a merchant refunds take. Depending on whether your business has a physical store or not, this process might vary from one company to another. Luckily for you, we’ve researched numerous sources about how long does a merchant refund take for you to read and understand all the details in a single place. Keep reading if you want to know more!

What is a Merchant Refund?

A merchant refund, or a “buyer’s refund,” is when a customer returns an item and gets a refund. This can be because they don’t have time to return the product or they think it’s defective. Although this is a common practice, it can be risky for sellers who face additional fees and penalties from their payment processing company due to chargebacks. That’s why it’s crucial to know how long does a merchant refund take, so you can process them as quickly as possible without facing any issues.

How long does a merchant refund take?

This will depend on the payment processor you use, the type of refund and the type of transaction. If you accept returns via an e-Commerce website, you will have a different process for the customer than you will for a customer who returns merchandise to your brick-and-mortar store. The Federal Trade Commission suggests businesses use a written policy for how long they’re willing to wait for customers to return products they’ve purchased. This will help you manage your inventory and streamline your cash flow. If you have a physical store, you’ll want to include a cash register receipt with the date and details of the refund. You may also have a printed sign on the counter that informs customers they’ll have a specific amount of time to bring back merchandise they’ve purchased.

Why Does It Take So Long?

If your business accepts returns and has a physical place of business, you’ll need to ship the product to the customer. If you accept returns online, you’ll need to allow for the product to get back to your facility. Depending on the shipping option you’ve selected, you might have a few days to wait for the return to be processed. The Federal Trade Commission suggests businesses use a written policy for how long they’re willing to wait for customers to return merchandise. This is important because it helps you manage your inventory and streamline your cash flow.

Why are merchant refunds important?

When you accept a refund for a product, you’re essentially giving the money back to the customer. Although this is necessary at times, this can also be a red flag to your payment processor. The processor may automatically take the money back out of your account as a chargeback. If you don’t have the funds in your account to cover the chargeback, it can lead to a negative impact on your credit score. It can also result in fees from your payment processor, potentially costing you thousands of dollars in penalties. This is why it’s crucial to keep track of how long does a merchant refund take and how long the customer has to return the product.

What is the Merchant Reprocessing Delay?

A merchant reprocessing delay is the amount of time it takes for a payment processor to clear a refund. The processor will put this money into an account called a refund account. When the processor clears the refund account, it will remove the funds from the refund account and add them to your account. If the funds don’t immediately transfer to your account, it could be because of the merchant reprocessing delay. The processor is holding the funds in the refund account because the customer has disputed the charge. The processor won’t complete the refund until the dispute has been resolved. This typically takes about two weeks, but it can be longer if the customer has sent the processor a lot of disputes. This is another reason why it’s so important to keep track of how long does a merchant refund take.

Read more: What is a merchant processor

How does a credit card refund work?

In some cases, the bank may take longer than the processor to complete a refund. The Federal Trade Commission recommends keeping track of how long does a bank refund take. You can also contact your bank to find out their average refund times. If the bank is holding the refund, it will likely be because of a deposit dispute. Banks may hold the refund while they investigate the source of the deposit. This only applies if you’re accepting credit card transactions and will vary based on the processor you’re working with.

Unlimited Merchant Refund (UMR)

An unlimited merchant refund (UMR) is a refund service that will reimburse you for chargebacks due to customer disputes. A UMR will help you prevent merchant refunds by allowing you to dispute chargebacks automatically. A UMR will typically come with a monthly fee that you’ll need to keep in mind when calculating how long does a merchant refund take. You’ll need to account for the amount of time it will take for the chargeback to get resolved and for the funds to transfer to your account. This also applies to the time for the customer to dispute the chargeback. You’ll want to keep an eye on how long does a merchant refund take in order to know when you’ll get the funds.

Electronic Merchant Refund (EMR)

An electronic merchant refund (EMR) is a funding source that allows you to pay a chargeback fee sooner than you would with a traditional merchant account. A chargeback is when a customer disputes a charge on their credit card and the bank is able to take the money from your account. EMRs work by using the funds from your refund account to pay the chargeback fee. It’s important to note that you do not have access to those funds until the chargeback is resolved. To take advantage of an EMR, you’ll need to have a merchant account with a payment processor that offers this service. It’s recommended to check with your processor to see which funding source they recommend.

Final Words

There will always be customers who aren’t satisfied with their purchase and decide to get their money back. This is perfectly normal, but you need to make sure you’re keeping accurate records of how long does a merchant refund take and what the customer has to do in order to return the product. This is important because it helps you manage your inventory and streamline your cash flow. If you’re prepared for when customers return products, then you won’t have any problems dealing with the influx of merchandise being returned. In the end, it’s crucial to make sure you’re keeping track of how long does a merchant refund take. This way, you’ll be prepared for any returns and will know exactly how long it will take for the customer to get their money back.