Purchase Return Authorizations for Mastercard® and Discover®

Base Insights

Mastercard® and Discover® have introduced online authorizations for purchase return transactions. The availability of these authorizations is intended to enable a more positive cardholder experience and decrease the number of merchant service inquiries about returns.

Similar to an authorized purchase, an authorized purchase return that is pending settlement is included in an online statement. This benefits a cardholder by allowing them to get real-time information on a return (credit) through their banking application. Issuers can also enable services like text message alerts for these transactions.

Issuers can validate cardholder accounts at the time that a purchase return is submitted for authorization. This gives them the opportunity to decline cards they feel are fraudulent and minimize chargebacks for closed or non-existent accounts.

Certain transactions are not eligible for purchase returns. This includes money orders, fund transfers, ATM withdrawals, and manual cash disbursements. Sales of cash-like instruments are also ineligible.

Next Steps for Merchants and Partners

If you haven’t done so already, you should review the new specifications so you understand the impact on your point of sale devices, platform, and applications. You should also consider how this development affects your services and the associated policies.

Partners Obligations

Partners who offer merchant services through a third-party service must ensure that the software supports purchase returns.

Partners that use BaseLink™ must enhance their integrations to pull the response code, authorization date, and authorization code from refund responses to store in their records. Integrators also have to update their integration to handle Declines on Refunds like they would for Sales/Authorizations.

Partners that use POS Applications (Class A) must ensure that all affected Class A applications that support purchase returns are switched to enable by default. An application download is required to enable online Mastercard and Discover purchase return authorization processing at a terminal. Purchase return authorization processing can be enabled on demand by merchants that are ready to accept online purchase returns.

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