Do credit card payments have to be refunded back on to the credit card?

squirtydabomb

If a merchant offers you cash, cheque or bank transfer, is this acceptable?

Ebe_Scrooge

I'd say it's acceptable, down to personal choice really. But most merchants will insist on refunding back to the card if you originally paid by card, due to the fee they will have incurred.

Unless, of course, the merchant is in some way "dodgy" and there's a chance the cheque will bounce !

CKhalvashi

To process a transaction costs us about 1.5%, and if we refund, we want that back.

I have been known to offer back in cash, minus 1.5% fee before now, although I don't deal with the public.

Toadeh

I always thought it HAD to go back to the card for a couple of reasons:

1) Its not your money, its their money
2) Whats to stop you buying something, taking it back and getting the cash? thats a cheap cash advance so they wouldn't want that.

joedenise

I recently had a refund back into my bank account after chasing the company I'd paid by CC. They decided to do a BACS transfer because they had taken too long to refund my money. I think this is the first time a mechandiser hasn't insisted on refunding to the card used.

Denise

planteria

yes, i don't very often ask for refunds, but if i do i ask for it to be paid to my current account. it's nice to keep the cashback:A

phona

I used to work in a supermarket and when we did refunds it was always cash, regardless of the original method of payment. The refund system was rubbish - just wrote it in a book - so that's probably why.
There's evidently no rule saying it must be refunded to a card so it's just personal choice. I think I'd be happy to take cash unless it was a big transaction, but not too sure about bank transfer.

InsideInsurance

There are two issues, one is merchant fees and the other is money laundering/ fraud

The first is simple, pay by credit card and the company pays between 0.5% to 4% fee and if they refund by any other method they still pay that fee. Pay it back by the same way then the fee disappears as its a reversal of the transaction.

The second is much more grey and its arguable which is the stronger argument. Fraud is simple, someone pays on a stolen card and then gets a refund in cash. 5 weeks later the actual card holder receives their statement and sees an unrecognised transaction and instigates a chargeback on the grounds of fraud so the seller loses the money twice.

Anti money laundering is similar sort of situation but is more a legal requirement. People get money from doing something dodgy, they pay it to a credit card company so they get a £15k positive balance, they then spend that money to buy a car, they then take the car back and get a cash refund. They then go and buy some diamond jewellery with the cash which they then pawn. When the police stop them with £10,000 in cash on them they say its all legitimate because they just sold some jewelry. Obviously in reality the chain of transactions are much longer to make the cash look legitimate but you get the concept.

As a merchant you;d be required to prove that you've done enough to stop money laundering. Once simple way is to say you only ever refund to source and so if someone pays by card you will only refund to that card rather than giving them cash which helps them to clean the money/ make the transactions more difficult to trace.