This article will explain the difference between a refund and void with your merchant provider / gateway.  This only applies to credit card transactions not ACH transactions.  ACH transactions can not be voided and can not be refunded for 7 days after the transaction has been processed.

Before we start here is an explanation of what an gateway authorization and settlement which are performed by your merchant provider/gateway.

 

What Is A Gateway Authorization?

When a credit card is ran an authorization occurs against the card holders credit card account.  This is to verify the client has a valid account in good standing.  At this stage no actual money has changed hands - only an authorization that there is enough credit available on the credit card has occurred. An authorization is a "promise" to pay. An authorization is a hold on the persons credit card - it may show on their online statement but it's not an actual charge on their card yet.

 

What is a Gateway Settlement?

Periodically (normally once per day, but sometimes more often) a process called settlement occurs. This is the step where the authorization that occurred earlier is settled - this is when the actual money changes hands and the card holders card is actually debited. Until settlement occurs the card holder has not been actually charged - they have only promised to be charged.

 

Now that we covered what an authorization and settlement are we can better explain the difference between a refund and a void.

 

What Is A Refund?

A refund is what occurs after a settlement by your merchant provider / gateway has completed.  The refund will allow you to reverse the transaction and transfer the money from your account back to the client.

A merchant provider will not allow any refunds after 120 days.  If the payment is past the 120 day mark you will have to perform a refund to cash or check and then pay the client with either cash or a written check at the club level.

 

What Is A Void?

A void is simply not settling an earlier authorization.  When an authorization is not settled then the funds hold on the card holders account simply expires and the card holder gets these available funds "unfrozen".

Depending on your merchant provider they may not allow you to void a transaction and the only option you will have is to wait for the transaction to settle and then perform a refund.  If they allow you to void transactions you can typically perform this the same day as the purchase unless they settle accounts several times which will limit you change to void down to a few hours.

Because a void is a cancellation of a transaction it is not possible to partially void.

How Does ClubReady Handle Voids vs Refunds?

A void will show under a client record in their refunds list, marked specifically as a void. If a void occurs, the transaction will show on your Gross Sales Detail as cash out (refund). A refund will show on gross sales with the offsetting amount displayed in Refunds & Returns section of the summary.