uk.finance

On Tue, 25 Sep 2007 04:44:51 -0700, s_pickle2001@ put finger
to keyboard and typed:

>On Sep 23, 2:30 pm, Mark Goodge
>wrote:
>>
>> There are two main reasons why card payments are always refunded by
>> means of reversing the charge. Firstly, it's part of the money
>> laundering regulations. If the retailer makes a refund other than by
>> reversing the orignal payment, they can end up being dropped in it
>> themselves. Large organisations that do their own card handling and
>> can negotiate their own contract with the banks have a certain amount
>> of flexibility, but smaller retailers who use a third-party payment
>> gateway have no option - they are contractually bound to make any
>> refunds for payments made through the third-party system by reversing
>> the payment itself. This clause in the contract is a legal obligation
>> and the card processor would be in breach of the law if it doesn't
>> enforce it.
>
>Money laundering, my foot. The customer could withdraw cash directly
>from an ATM if he wanted. Money laundering only applies to proceeds of
>crime. If the funds were illegal, then accepting them in the first
>place was ML.

You may be right, but there's no point arguing with me - argue with
the people who wrote the law.

>> Secondly, if a refund is made by some other means (eg, a cash refund
>> on a card payment), then the retailer has no guarantee that the
>> customer will not then claim (falsely) that they have not been
>> refunded at all and get a chargeback from their card company, thus
>> getting a double refund. That would be fraud, of course, but it's not
>> something that the police would normally take much interest in and the
>> cost would be borne by the retailer in any case.
>
>You would get a recipt from the customer that you made a refund,
>wouldn't you?

Yes, but since the card companies insist that any payment made from
their accounts is refunded to their accounts they do not recognise as
legitimate any such receipt. It may be possible for the retailer, if
necessary, to enforce it through the courts, but that would involve
admitting that they've broken their contract with the card company and
hence mean the end of their ability to take card payments. The card
companies have the retailers over a barrel in this respect.

Mark
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