Return and Credit Policy Guidelines for Card-Present Merchants

Return and Credit Policy Guidelines for Card-Present Merchants

Developing a policy for handling credits and returns is a requirement that every merchant has to comply with, before it can get approved for a merchant account. Moreover, as it is certain that customers will want to return a product at least on occasion, you should set the rules on:

  1. Whether returns are allowed,
  2. Under what circumstances and
  3. What the customer would get in return.

When answering the above questions, keep in mind that the way you manage return requests can have a direct impact on your customers’ purchasing decisions. Some consumers would not make a purchase if they were not ensured that they would be allowed to easily return it for a full refund, if they were not satisfied with the product. Most of the biggest and most successful retailers have a “no-questions-asked” return policy, designed specifically to attract the more hesitant among consumers who otherwise may not make the purchase. Just look at Wal-Mart, if you want a proof of how well this strategy works.

Yet, although a “no-questions-asked” return policy is the best option from a customer-relation point of view, many merchants feel uncomfortable with it. Some are just not willing to accept the return of an item that is in a perfect condition and is just as advertised. It can feel like the customer is taking advantage of you. That may or may not be so, however the “no-questions-asked” return policy makes a perfect business sense and you should at least consider it. The following table lists the most widely used credit and return policies.

Credit and Return Policy


No returns or refunds You state that your business does not accept returned merchandise and does not issue refunds. All sales are final.
Merchandise exchange only You state that your business accepts returned items only to be exchanged for similar items at the same price.
Store credit only You state that you accept returned merchandise and will issue credit in the amount of the original sale, which can only be used in your store.
Unconditional credit You state that you accept returned merchandise (typically within a certain time-frame) and will issue unconditional credit for it.
Specific terms If you and your customer have agreed on any specific terms in regards to your credit and return policy, these terms must be printed on the sales receipt or an accompanying document. If a separate document is needed, it must be signed by the cardholder, in addition to the sales receipt.

Be advised that some payment processors may not underwrite your merchant account if you do not accept returns, especially if your business operates in a high-risk industry.

Once you have developed your return and credit policy, make sure it is communicated to your customers. For store-front merchants, the credit and return policy must be disclosed prior to the completion of the transaction and it must be printed on the sales receipt. If the policy is printed on the back of the sales receipt, the cardholder must initial the back, in addition to the signature he or she has placed on the front. If the policy is written on a separate document, this document must also be signed by the customer. Your return and credit policy should also be placed near the register at the point of sale.

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