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How to Reverse Credit Card Sales?

Q - What is the process to reverse out a credit card sale that hasn't been picked, invoiced, etc.?

A - The following outlines the procedure depending on whether you had to delete the original order or keep the original order:

If you deleted the original order 

If you deleted the original order where you did the charge, you will have to reverse the credit card charges through A/R -> Processing -> Credit Card Transaction Handle. Choose "Add" at the credit card number field and press F8 to search the original credit card transaction:

In the popup "Select Payware Transaction" window, find the credit card charge transaction you wish to void or refund, highlight it and press the Return key.

Now the cursor will return back to the previous screen. If you pick a "Sale" transaction, then on the "5. Trx Type" field, it will default to either "V" (Void) or "R" (Refund).  

Generally speaking, using Void is a better option than Refund.  A voided credit card charge does not show up on customer's credit card statement. On the other hand, if you choose Refund, the customer will see both the original charge and the refund amount on the statement.  Sometimes the refund does not show up on the same statement period, which can cause a problem when the customer sees the charge without seeing the refund.

You can only void a credit card charge if it has not been settled yet. Since most systems process credit card settlements overnight, you usually can't void a credit card transaction until the next day. Our system will default "5. Trx Type" to "V" for void if the previous credit card charge was done in the same day. Otherwise, it will default to "R" for refund.

You may default the rest of the fields, then at field "21. Approval No"  press F4 to Interface with the credit card payment gateway.  Then post this void or refund credit card transaction, which will create a negative payment record in the A/R open item file to offset the original charges.

At this moment,  there are two payment records.  One is CR (created by the original credit card charge) and one is DR (created by the void or refund).  They have the exact opposite amount of each other.  

To get them off the customer record, you will need to do a re-apply. Typically, you can re-apply both of them to a non-relevant invoice.  There will be no change to the balance amount of that invoice because these two amounts cancel each other out.  Once this is done, these two records will not appear as outstanding items on the aging report.  In addition, when you purge the fully paid open item, they will be moved to the history.  You can’t do a direct delete of these two payment records since that’s against the accounting audit trail principle.

If you keep the original order

If you keep the original order, then it is best to reverse it on the COP side. You will do so by going to the COP -> Processing -> Order Entry -> Change, and bring up the original order.  Go to the Order Billing Screen, and then go to field "10. Amount Paid" to bring up the payment window.

In the payment window, go to field "4. Credit Card Amt."

In the popup window, enter the exact negative amount of the original credit card charge and press F8 to search the original credit card transaction.

In the "Select Payware Transaction" window, highlight the original charges and press Enter. This will return the original credit card transaction to Void or Refund. The system will ask if you wish to "Void or Refund":

If the original amount was charged on the same day, the system will default to "V" (Void). Otherwise, it will default to "R" (Refund).  Once it is successfully voided or refunded, you will see something like following:

This negative amount reverses the credit card charges on the payment gateway side. In addition, the system does a real time posting and creates the negative payment on the A/R side, where you still need to perform a re-apply to get both payment records off the system.

The COP Payment window will now show a zero credit card charge due to the fact that these two charges cancel each other out.

Just as a recap, under the following conditions, the system will create a "Refund" instead of a "Void" transaction when you enter the negative credit card amount:
(1) The original credit card charge was not made today; or
(2) The negative amount does not equal the original charge; or
(3) The original transaction is not a sales transaction; or
(4) The credit card number is entered manually, instead of searched for by using the F8 key.

If you usually charge the credit card at the time of order entry, you may be more likely to create this type of negative payment adjustment scenario. This is because a customer can often change or cancel their order before you ship it.  Also, if the order is back-ordered, you may violate certain states' consumer protection laws, which often set a limit on the number of days prior to shipment that you can charge a credit card.

Our suggestion is to perform a full or partial "Pre-Authorization" on the credit card at time of order entry, then only charge the customer's credit card right before shipping takes place.  This, for example, can be after the pick ticket is printed.  If only some of your orders are placed with credit card terms, you could set up the credit card terms code so it will cause the order to be put on hold when the pick ticket is printed, and therefore transfer to the credit department to charge the credit card before the final pick ticket is printed.

Note: Before the update made on 11/14/2014, the COP Payment Window did not support the Void function.  All negative payments would be treated as Refund transactions if your Elliott revision is older than 11/14/2014.

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