How to do a refund on an EFTPOS machine

On most terminals it’s the menu key, then Refund, then the amount, then present the card. You’ll be asked for a manager password or a refund PIN, because a terminal that lets any casual refund money to any card is a terminal that will eventually refund money to the wrong card. That’s the mechanics of it, and it takes about twenty seconds.

The part worth knowing is that refund, void and cancellation are three different transactions, and picking the wrong one costs you money.

Void it if you can, refund it if you can’t

A void (some terminals call it Cancel, or Reversal) kills the transaction before it settles. The original never reaches the customer’s statement, and in most cases you don’t pay a merchant service fee on it, because there’s no completed transaction to charge you for.

A refund is a brand new transaction going the other way. The original settles, the refund settles, both appear on the statement, and you pay the acquiring cost on the sale. Some providers also charge you a fee on the refund itself.

So the rule is simple: if it happened today and hasn’t settled yet, void it. If it settled, refund it.

Same-day, before your batch closes, go looking for the void function. If you’ve already settled for the day — and most terminals settle automatically in the early hours — the void is gone and a refund is your only option.

Check the receipt you’re holding. If the last settlement report ran after that transaction, it’s settled.

Doing the refund

On the terminal, card present. Menu → Refund → enter the amount → insert or tap the customer’s card → enter the manager password. Keep the original receipt next to you and match the last four digits and the amount before you hit go.

Refund to the same card. Always. Not to a different card, not to cash, not by bank transfer because the customer says they’ve closed that account. A refund pushed to a card that didn’t pay for the goods is the oldest trick in the book and it’s how staff quietly steal from businesses. Every acquirer’s risk team watches for it, and a run of card-not-present refunds to cards with no matching sale will get your facility reviewed. If the original card genuinely no longer exists, that’s a conversation with your provider, not something to improvise at the counter.

Refund the exact amount, or less. Never more. Over-refunding is treated as suspicious and some facilities block it outright.

Partial refunds work on almost every terminal — just key the lower amount. Useful when one item out of four comes back.

When the customer actually gets their money

Here’s where you’ll cop it, and it isn’t your fault: the refund is instant at your end and it is not instant at theirs.

You’ve handed back the money the moment the terminal prints approved. The customer sees it when their bank posts it, and that’s typically three to five business days. On a credit card it can be longer, because it goes back onto the card balance rather than into an account.

Weekends don’t count. A refund on a Friday afternoon is not landing until the middle of the following week, and if the customer is standing in front of you expecting it back by Saturday, you want to tell them that up front. Write the date on the receipt if it helps. The angry phone call on Monday is entirely preventable with one sentence at the counter.

You don’t get your merchant fee back

Worth being blunt about this, because most merchants don’t know it and find out from their statement.

When you refund a settled sale, you get the transaction amount back to the customer. You generally don’t get back the merchant service fee you paid on the original sale. On a $1,000 sale at, say, a blended rate, you’ve paid your acquirer for processing it, and processing it did happen. The refund doesn’t undo that.

Some providers charge a fee on the refund on top. Worth checking yours.

Which means refunds have a real cost, and a business with a high return rate — clothing, online, furniture — is wearing that cost every month without seeing it broken out anywhere. If that’s you, it belongs in the conversation when you’re comparing what a facility actually costs, not just the headline rate. How the pricing shapes work covers that.

Refund is not the same as a chargeback

A refund is you giving money back voluntarily.

A chargeback is the customer going to their bank instead of coming to you, and the bank taking the money out of your settlement while it investigates. You’ll get a notice, a deadline, and a request for evidence. You’ll also usually cop a chargeback fee whether you win or lose.

Which is the actual argument for being quick and easy with refunds. A refund costs you the fee. A chargeback costs you the fee, plus the admin, plus a mark against your facility — and enough of them and your acquirer starts asking questions about your business, not the customer’s. It is genuinely cheaper to refund a $60 dispute you think you’d win than to fight it.

Housekeeping that stops this being a problem

Set a manager password and don’t give it to everyone. Refund fraud by staff is real and it’s almost always at businesses where the refund PIN is written on the back of the terminal.

Reconcile daily. Your settlement report should match your POS takings. If it doesn’t, a refund you didn’t authorise is one of the few explanations, and you want to find that in a day rather than at the end of the quarter.

Write down your refund policy and put it on the receipt. You can’t contract out of the Australian Consumer Law, but you can set out what you do about change of mind, and having it in writing settles most arguments before they start.

Know where your refunds show up. They come out of your settlement, not out of a separate pot. A big refund day can mean a small settlement, and if your cashflow is tight that matters. Settlement options is the thing to read if that’s ever caught you out.

If your terminal doesn’t have a refund function at all, or the password has been lost with the staff member who set it up, that’s a five-minute fix — don’t work around it for six months.