# Void Transactions Explained: They Differ from Refunds

![Void Transaction: A debit or credit card transaction that is canceled before any money is taken from the cardholder's account.](https://www.investopedia.com/thmb/OTqFw8w8m59cA6HqW9Z9hywey9M=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/Void-transaction_final-05280c7157604d88bcb8b274fcb949a0.png)

*— Investopedia / Michela Buttignol*

## What Is a Void Transaction?

A void transaction is a debit or credit card transaction that is canceled by the merchant before it is settled by the cardholder's bank and the merchant has received payment. Transactions are often voided when customers or merchants discover that an error has occurred or when fraud is suspected. Void transactions are different from refunds due to their timing and processing differences.

These transactions have a short-term impact on the cardholder's access to funds due to pending transactions. Void transactions usually happen on the same day as the original charge.

### Key Takeaways

*   A void transaction cancels a card sale before the money moves from the cardholder's account to the merchant.
*   Voided transactions may appear as pending on statements but disappear after a short time.
*   Common reasons for voiding a transaction include errors, fraud, or customer request.
*   Unlike voids, refunds occur after a transaction is settled and can take longer to process.
*   Transactions can only be voided within a limited time frame, often on the same day.

## Understanding the Process of Void Transactions

In a card transaction, the merchant's POS terminal sends information electronically via a card network. The terminal authorizes the transaction if the network determines that the card is valid and the customer's bank determines that there are enough funds or sufficient credit in the account to cover the charge. These steps, which usually take place in a matter of seconds, are known as [authentication](https://www.investopedia.com/terms/c/credit-card-authentication.asp) and [authorization](https://www.investopedia.com/authorized-transaction-definition-4683964).

However, the transaction is not finished until a later step, called [settlement](https://www.investopedia.com/terms/s/settlement-bank.asp), when payment is released from the customer's account and transmitted to the merchant's bank. If there's a problem, the transaction can be voided before money moves.

Several reasons may lead to the voiding of transactions. Perhaps the customer has changed their mind about a purchase and asked the merchant to void it. Or, the merchant may have noticed a mistake of some sort and proactively voided the transaction. Once voided, the transaction will show up on the customer's account as a pending transaction and then disappear after a certain amount of time.

Pending transactions put a hold on the money that can last anywhere from 24 hours to several days. That can inconvenience the customer because they won't be able to access the money during that time if they need to use their card again.

### Note

A void transaction generally takes place on the same day as the original transaction.

## Real-Life Examples of Void Transactions

### Problems With Purchases

Voiding transactions promptly can quickly correct mistakes. For example, a shopper who has just paid for their items at a grocery store might pick up their bags and discover that the cashier accidentally included some of the next customer's items. The cashier can void the transaction, re-scan the correct items, and charge the customer the correct amount.

Some merchants offer a limited time to cancel a purchase if the customer changes their mind. This often occurs with [e-commerce](https://www.investopedia.com/terms/e/ecommerce.asp) sellers, where a buyer can cancel an online purchase within 24 hours. If they do, the seller will void the transaction, the buyer won't be charged, and the goods won't ship.

### Fraudulent Transactions

Potentially fraudulent charges can also be voided. Card issuers have fraud detection procedures to flag suspicious transactions before they can be completed.

Most card companies will place these transactions on hold until the customer can verify whether the transaction is legitimate. If the customer says it wasn't, the company can then void it. When a customer cannot be reached for verification, many card companies will automatically void a suspicious transaction before it is settled.

> **Important**
>
> Because refunds are issued after the money has already passed through a customer's account to the merchant, the process can take longer than with a void transaction.

## Comparing Void Transactions and Refunds

Void transactions differ from [refunds](https://www.investopedia.com/terms/r/refund.asp). Void transactions stop the process before money transfers from the customer's account to the merchant. Refunds, however, are issued after a transaction has settled and the merchant has received payment.

Some merchants and credit card processing systems may settle transactions immediately. When a transaction settles immediately, the seller can only issue a refund rather than void the transaction.

Refunds usually take longer to complete than void transactions. Some refunds may be reflected in the cardholder's account within 48 hours, but others can take as long as 30 days.

## What Is a Chargeback or Reverse Transaction?

A [chargeback](https://www.investopedia.com/terms/c/chargeback.asp), sometimes referred to as a reverse transaction, is much like a refund in that the customer gets their money back, in this case, by having it credited to their credit or debit card account. These transactions can be initiated willingly by the merchant or forced on them by the cardholder or card issuer. For example, if a customer claims that a product was faulty and the merchant refused to take it back, they can ask their card issuer to reverse the charge. Merchants can also dispute a chargeback.

## What Does "Posting" Mean With a Credit or Debit Card?

[Posting](https://www.investopedia.com/terms/c/credit-card-posting.asp) refers to the point at which a credit or debit card transaction has been completed, and the money has moved out of or into the cardholder's account. The date that will be reflected on their statement is known as the [post date](https://www.investopedia.com/terms/p/post-date.asp) or settlement date. In many cases, the transaction will occur later than the date it actually occurred.

## Why Are Credit or Debit Card Transactions Declined?

Credit and debit card transactions can be declined for many reasons. For example, a credit card might not have a sufficient credit line to cover the charge, or the checking account linked to a customer's debit card may lack enough cash. Transactions can also be declined if the card has expired, the customer entered an incorrect [PIN](https://www.investopedia.com/terms/p/personal-identification-number.asp) or other information, or the credit card company suspects fraud, among other causes.

## The Bottom Line

A void transaction cancels a payment before funds leave the cardholder's account, preventing charges from being processed. Void transactions are typically enacted the same day as the original transaction, offering a rapid solution to errors or fraud.

They differ from refunds because they occur before settlement, while refunds happen after the fund transfer is completed. They can sometimes still appear as pending but will eventually be removed without affecting the cardholder's balance.  

Void transactions are practical in many situations, including mistaken charges and fraud detection, but they're time-sensitive and there's the potential for a temporary hold on funds during the process.

> **Article Sources**
>
> 1.  Capitol One. "[What to Know About Pending Transactions](https://www.capitalone.com/learn-grow/money-management/pending-transactions/)."
>     
> 2.  Consumer Financial Protection Bureau. "[How Can I Get a Refund on a Product or Service I Purchased With My Credit Card?](https://www.consumerfinance.gov/ask-cfpb/how-can-i-get-a-refund-on-a-product-or-service-i-purchased-with-my-credit-card-en-1969/)"
>     
> 3.  Discover. "[What Is a Credit Card Post Date?](https://www.discover.com/credit-cards/card-smarts/what-is-post-date-in-credit-cards/)"
>     
> 4.  Federal Trade Commission Consumer Advice. "[When a Company Declines Your Credit or Debit Card](https://consumer.ftc.gov/articles/when-company-declines-your-credit-or-debit-card)."
>     
> 5.  Chase. "[Why Was My Credit Card Declined?](https://www.chase.com/personal/credit-cards/education/basics/why-card-was-declined)"