Authorization 29 July 2021

Issuer Requirements and Best Practices for Merchandise Return

Authorization Messages
Global | Acquirers, Issuers, Processors, Agents
Visa Network; Europe Processing

Overview: Visa is reminding issuers of the importance of accurately and consistently using appropriate
response codes to respond to merchandise return authorizations requests and restrict the usage of Response
Code (RC) 57—Transactions Not Permitted. Visa is also providing best practices and additional resources on
merchandise return transactions.

When consumers return merchandise or cancel services / subscriptions for which they have already been charged,
the merchant is required to process a merchandise return authorization (MRA) to inform the issuer that a refund is
being processed to the cardholder. The MRA is identified with Field 3—Processing code containing a value of 20—
Credit Voucher or Merchandise Return Authorization and indicates to the issuer that the value in Field 4—
Amount, Transaction should be credited (added) to the cardholder account rather than debited (subtracted).

Issuers are required to support MRAs and should only decline when the original account is no longer available, the
cardholder has severed their relationship with the issuer, or on a product that does not accept credit transactions
by design. When there is a need to decline an MRA request, issuers must use the descriptive response code that
most accurately reflects the reason for the decline to help merchants take proper action to resolve the refund
(Visa Rules ID#: 0030640).

Recently, Visa has observed an increase of decline RC57—Transactions Not Permitted on general credit and debit
products with normal status. Use of this response code is inconsistent with the requirement to support the MRA
message and has caused confusion for the customers, disruption of the merchant operation and potentially the
increase of “Credit Not Processed” disputes on the original purchase transactions. Use of RC57 on MRAs should
be limited to non-reloadable prepaid cards that do not accept credit transactions, or certain healthcare-related
prepaid products where transactions are restricted to certain merchant categories.

General Requirements and Best Practices for Issuers

Issuers should follow the below requirements and recommendations for MRAs:

• Issuers / issuer processors must separate their authorization processes specific to return transactions from
regular purchase transactions. Issuers must attempt to approve MRAs when the credential is valid and active.
Issuers should use RC 00—Approved and Completed Successfully to approve an MRA.

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• Upon approval of an MRA request, issuers are required to make the information available to the cardholder as
a “pending” item on the online statement until the clearing record and settlement are processed (Visa Rules
ID#: 0029557).

• Visa strongly recommends that issuers do not release funds based on the authorization alone before
settlement records are processed.

• When evaluating an MRA request, Visa recommends that issuers do not validate unnecessary information for
merchandise returns, nor set instruction for Visa to validate them. Validating the open-to-buy amount, Card
Verification Value 2 (CVV2), expiration date, card authentication method (CAM), Address Verification Service (AVS)
and other security fields is critical for a purchase transaction, but not necessary for a purchase return transaction.

• When declining an MRA, issuers must use one of the response code values in the list below. The use of any decline
response code not in this list causes confusion and disrupts the merchandise return experience for cardholders.

Response Code Description Use Case

May be used for regulatory restrictions preventing

03 Invalid Merchant
transactions at certain types of merchants (e.g., gambling).

Invalid data format in the amount field; typically used in

Invalid Amount, or Currency Conversion
13 multicurrency conditions where transaction currency
Field Overflow
conversion causes field length overflow.

14 Invalid Account Number (No Such Number) Account is closed or never existed.

Account is closed and cardholder relationship with the

46 Closed Account
issuer is severed.

Indicates the transaction type is not supported by the

issuer1 or is invalid for the card type. For MRAs, usage
applies only to non-reloadable prepaid cards that do
57 Transaction Not Permitted to Cardholder
not support credit transaction types, or certain
healthcare-related prepaid products where transactions
are restricted to certain merchant categories.

Used when a transaction fails a fraud rule in the issuer’s

59 Suspected Fraud fraud detection system or Visa Real Time Decisioning
(RTD) / Visa Risk Manager (VRM).

Transaction Cannot be Completed— Used for regulatory restrictions which may be

93
Violation of Law temporary or permanent.
1
Issuers are required to support MRAs, therefore RC57 is not a valid response code for general credit or debit card transactions.

Actions Required

• Issuers should evaluate their authorization strategies on MRA transactions and ensure that only valid response
codes are used.

• Visa strongly recommends that issuers do not release funds based on the authorization or advice messages
alone before settlement records are processed.

• For issuers with suboptimal approval rates for MRA transactions, Visa strongly recommends reviewing their
CORE setup on MRA processing and/or opting in to stand-in processing (STIP) to allow Visa to process and
respond to credit voucher and MRA transactions on their behalf. This would serve as a temporary measure to

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 allow issuers to apply enhancements to their authorization strategies and system capabilities for purchase
return authorization processing without disrupting cardholder experience at the point of sale.

• Issuers that wish to utilize the merchandise return processing option for Visa to respond to credit voucher and
merchandise return authorization transactions on their behalf should complete the appropriate client
information questionnaire (CIQ)—available from the CIQ page at Visa Online—and return it to Visa.

Best Practices Guide for Better Usage of Response Codes

Refer to the following article in the April 2021 and July 2021 VisaNet Business Enhancements Global Technical
Letter and Implementatoin Guide, Effective: 11 March 2021:

• Article 2.7—Changes to Credit Voucher and Merchandise Return Authorization Processing

Note: For Visa Online resources, you will be prompted to log in.

AP, Canada, CEMEA, LAC, U.S.: Contact your Visa representative. Third party agents should contact their issuer
or acquirer.

Europe: Contact Visa customer support on your country-specific number, or email CustomerSupport@visa.com.

Notice: This Visa communication is furnished to you solely in your capacity as a customer of Visa Inc. (through its operating companies of Visa U.S.A Inc., Visa
International Service Association, Visa Worldwide Pte. Ltd, Visa Europe Ltd., Visa International Servicios de Pago España, S.R.L.U. and Visa Canada Corporation) or its
authorized agent, or as a participant in the Visa payments system. By accepting this Visa communication, you acknowledge that the information contained herein
(the "Information") is confidential and subject to the confidentiality restrictions contained in the Visa Rules, which limit your use of the Information. You agree to
keep the Information confidential and not to use the Information for any purpose other than in your capacity as a customer of Visa Inc. or as a participant in the
Visa payments system. You may disseminate this Information to a merchant participating in the Visa payments system if: (i) you serve the role of “acquirer” within
the Visa payments system; (ii) you have a direct relationship with such merchant which includes an obligation to keep Information confidential; and (iii) the
Information is designated as “affects merchants” demonstrated by display of the storefront icon ( ) on the communication. A merchant receiving such
Information must maintain the confidentiality of such Information and disseminate and use it on a “need to know” basis and only in their capacity as a participant
in the Visa payments system. Except as otherwise provided, the Information may only be disseminated within your organization on a need-to-know basis to enable
your participation in the Visa payments system. Visa is not responsible for errors in or omissions from this publication.

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