A void transaction is one that a vendor or a merchant cancels before it is processed and the funds are debited from a customer’s account to a merchant’s one.
You might wonder how to void a transaction after getting to know the void transaction definition. Let's suppose you buy a box of chocolates for $10 via a credit card terminal. But instead of $10 on the terminal, the shop assistant accidentally enters $100 and charges your credit card. If you notice this mistake shortly after the payment has been made, there is a chance to revert it. If done immediately, the employee can void the transaction, excluding it from the sales made that day. In this case, the cancelled transaction will not undergo full processing and will eventually fall out of the consumer's account statement.
To void a transaction, a merchant should find the payment’s ID or authorisation number and cancel it at the point of sale, a payment gateway interface, or dashboard, depending on how this payment was received. It’s also important to know that even after a successful voiding, such payment may still be present on the payer’s credit card transaction list as a pending transaction and hold a certain amount of funds. No need to worry, it’ll disappear in several days and the money will be released.
Voided transactions usually disappear from a customer's bank account statements within 24 hours. The refund, in its turn, may take from 3 to 5 business days. But depending on the payment method, it may take up to 14 days. This is because some issuing banks do not complete the cancellation process until the payment authorisation period expires.
Transactions can be voided not only in cases of erroneous e-commerce payments for purchases but with fraudulent ones as well. The majority of card issuing companies utilise specific fraud detection systems that are able to spot suspicious transactions and inform about them. Further on, such transactions are placed on hold until the verification is done. If the customer, who made this payment, doesn’t verify it or verifies that it is fraudulent, such transaction will be voided. In case the customer is unavailable at the moment, the transaction will be voided automatically to provide safety and security of the customer’s funds and data with further investigation.
Although the concepts of voided transactions and refunds may seem to have something in common, they differ a lot.
During voiding of transactions, money isn’t transferred from a payer to a payee. It gets stopped midway. On the contrary, a refund may be issued after the payment has been done and the money is settled on a payee’s account. Some merchants and credit card processing systems can actually process transactions immediately and sellers are unable to cancel them. At this rate voiding is impossible and a refund is the only way out.
One more difference is in the swiftness of the whole process. It takes a much longer time to return the money from a refunded transaction – sometimes about 48 hours but in other cases, it may take about 30 days.
To sum up all the above, void transactions are a good way to avoid money losses for clients and save time in case of mistakes during the charging process. Voiding a transaction swiftly means preventing it from being fully processed. But if an error during a payment was not detected on time or the transaction was processed immediately, a refund is needed. Refunds are issued when the payment processing has been completed and the money already settled on a merchant’s account.