Mysterious refund


(Rika Raybould) #21

There’s a little bit of a mismatch between our auth expiry and what the merchant has to do because of various liability shifts.

Based on my rough understanding of network rules, the merchant can present the amount authorised within about 30 days and we would have to fight to contest it because we authorised the payment and then returned the money back to your available balance early.

We set it at 7 days for a balance of being nice to users against the risk of the merchant presenting after the authorisation expired but the user then not having enough available money.

For example, we can return those merchant-side declines where we approve a transaction but it fails on their side within a week, rather than a month.

Anything later than a month and Mastercard would find the merchant liable if contested because they didn’t present within their agreed time. That’s why they must present within 30 days or it becomes their risk. This may differ by merchant industry. :+1:


(Felix Ahatty) #22

This has just happened to me. I paid for some kitchen units with an online kitchen supplier totaling £2180 using my Monzo debit card 7 days ago. I had a notification today saying it has been refunded. I have spoken to the merchant three times and they are adamant I have paid. As a lot of planning ii going into the new kitchen I don’t want a situation whereby a week to go they suddenly cancel the order. I have contacted support and await a response.


(Hugh Wells) #23

Hey @dafelixo

This usually happens when a merchant fails to present for the transaction on time.

There are two stages of a transaction, authorisation (where we approve/deny a transaction request) and presentment where the transaction settles and funds transfer to Mastercard and the company (and exchange rates settle if it is in a non-GBP currency). Presentment usually happens 1 to 3 days after an authorisation. We show you authorisations live in the app as that tends to be the most useful information.
We reverse authorisations that haven’t presented after 7 days because this is usually indicative that a transaction has failed or been cancelled - examples include some ATMs that pre-authorise the amount you wish to withdraw before you confirm the withdrawal, and then fail to cancel the auth if you terminate the transaction. Active Card Checks also have this problem.

What has probably happened is that the Merchant Acquirer (company that processes the card transactions for the merchant) has not yet presented for these (they tend to do it in bulk) and you will see the amount leave your account as an “offline transaction” or late presentment in a couple of days :+1:

Sorry for any confusion!


(Richard Owen) #24

Hi Hugo.

This has also happened to me 3 times in the last 6 weeks, for 2 different merchants (Uber and Morrisons).

The Uber refund was for £14.75 and it happened 30 days after the original pending auth on 21st Jan. Way past the presentment deadline.

The 2x Morrisons refunds were for £4 and £5.05 and they happened 7 and 11 days after the original pending auths on 10th and 12th March respectively. Maybe they’re going to send presentment records in the next few days, but this confuses my balance.

On all 3 occasions I received the goods/services I originally paid for and walked away a happy customer.
So it appears I’ve been given free money. Which I’m pretty uncomfortable with.

Now I understand that this can genuinely happen from time to time and the merchant loses out. But it’s never happened to me before on Monzo (since Nov 2015). And with my previous bank it probably happened once or twice in 22 years.

Either:

  1. Multiple merchants/acquirers are mucking up at the same time and will never get their money.
    (-bad luck for the merchants)

  2. Monzo have started being overly generous with short auth expiry periods of 7 days.
    (-confusion for Monzo cardholders when they see a repeat of the original debit after it appears to be refunded)

  3. There is a bug where valid presentments after 7 days are not being correctly applied.
    (-this could be a very expensive bug for Monzo, or merchants, if the cardholder is not being correctly charged)

From the discussion above it appears to be option 2, but I’m interested to explore whether there is a better solution:

  • Perhaps the 7-day refund feed item could be a different colour indicating that it is not a normal reversal or product refund.
  • Perhaps the 7-day refund feed item could contain further information about potential presentments.
  • Perhaps after one of these refunds there could be some indication on the screen that there are still some funds “on hold” which may get cleared later.

Confusing cardholders for a further 3 weeks between apparent refund and valid presentment seems an undesirable user experience for valid transactions.

Richard


(Hugh Wells) #25

I’m really sorry, but it’s going to be very difficult for me to comment without looking at your at account and the specifics of what has happened.

I understand the concern here, but there are numerous reasons this can happen such as unmatched presentments, hanging authorizations etc. as I’ve mentioned. No “free money” is created - we just move the money to and fro a ringfence. If the merchant fails to collect the funds, that is something they would need to talk to their merchant acquirer (the card terminal company) about, however it is very unlikely :+1:

With the advent of the current account, our card processor has been moved in house which has changed the way we did things. Before on prepaid, I believe if an authorisation wasn’t presented it would continue to hang until you contacted COps and asked for it to be reversed. So you either have two situations here: lots of customers contacting support asking for hanging authorizations to be reversed, or a few customers contacting support when there is a late presentment after the authorisation has already been reversed :blush:
I think the difference here is why show you authorisations in real-time - this isn’t something other banks have tended to do, and an authorisation reversal shouldn’t be confused with a refund :+1: Showing authorisations in real-time has loads of advantages - I care about how much money I have to spend now, not 2/3 days down the line when the transaction is actually settled in a batch job :blush:

I’m not sure this is the case? As I’ve said, a merchant is able to present even if we revoke the authorisation.

This is something we’ve looked at - for instance, over the holiday period we stopped reversing authorisations automatically as we knew some merchant acquirers would not be presenting transactions over that period and we didn’t want to cause a load of mass authorisation reversals :+1:
7 days is actually a pretty reasonable timeframe. If you think about it, the merchant doesn’t get their money until the transaction is presented so most merchant acquirers will present within 1 to 2 days at most.

I don’t believe this is the case, although as I previously mentioned it is possible that presentments are mismatched from their original authorisation (which is an unfortunate issue with the way settlement works) which can cause an “offline transaction” to appear on your account, with the original authorisation still pending (until we automatically reverse it)

I’m afraid this wouldn’t be the case :sleepy: An authorisation is the “on hold” bit and once reversed the funds are no longer ringfenced.

I definitely think this could be a good idea - we do have some copy we use when reversing these manually. I will pass it on!

I think lastly, it is important to remember that card payments are fiendishly complicated. There are a large number of different mercant acquirers all around the world who do things a bit differently. Unfortunately it is very difficult to find solutions for everything but we are always working to improve the customer experience :+1:

Best,

Hugh


(Richard Owen) #26

Thanks for the really awesome reply Hugo - on Good Friday too!!

I agree with everything you’ve said. I’ve worked on payment authorisation software since I was at university. I’ve been involved in the design and development of 4 of them over the years. None of our customers (all banks and large retailers) has ever given their cardholders the real-time information about auths. One of the many reasons why I find Monzo so exciting.:hugs: But it clearly brings extra complexities. Which is why I think Monzo has to get the message right when showing cardholders which items are genuine reversals and credits, and which items are being reversed because the presentment hasn’t arrived yet.

Good luck finding the right balance :grin:

By the way - if you want to look further at my specific txns then please feel free. I raised this with in-app support on the 23rd. Minnie said she’d pass this on to the tech team but I haven’t heard back.

Regards
Richard


#27

Just be aware (and @HughWells has alluded to this, but worth mentioning explicitly) that there is no deadline. They can present again months and even years after the original authorisation, and it can leave you overdrawn, if you have no sufficient balance. It happened to me once, and also see this recent Tesco story:


(Richard Owen) #28

Good point nanos. :+1:
I shouldn’t say “presentment deadline”, I should use “pending auth validity period”.


(Hugh Wells) #29

I totally agree here and it is something I will raise to see if we can be a bit clearer about this. Interestingly, we often get customers contact us to report an automatic authorisation reversal as an unrecognised transaction so it is certainly something that needs looking into :+1:

Sorry to hear that, I’ll take a look this evening for you. Would you be able to DM me your account email address?


(Richard Owen) #30

DM sent. Thanks for your support Hugo Hugh. :star_struck:
(Sorry for getting your name wrong) :grimacing:


#31

I’ve never quite liked that Monzo does represent these reversals as a refund, instead of greying out or striking through the original transaction.


(Jack) #32

I agree with you this would be better solution. Maybe with an added note. “The Money was never collected by the merchant, but may be collected at a future date"


(Daniel Chatfield) #33

There are two types of Mastercard authorisations:

  • final auths (with a 7 day payment guarantee period)
  • preauths (with a 30 day payment guarantee period)

A merchant can send subsequent linked auths to request to increase the preauth period for a further 30 days but this can be declined.

cc @simonb @alexs


BPme Fuelling app
How do card payments work?
Travelling with Monzo to North America
Pre-ordering authorising the full amount months in advance
#34

My recollection may be wrong but last time I read the manual there were three types, as in addition to POS preauth and auths their is ATM auth periods too:

• final auths (with a 7 day payment guarantee period FROM THE AUTHORIZATION APPROVAL DATE)
POS preauths (with a 30 day payment guarantee period)

AND

• ATM auths (with a 7 day payment guarantee period)


(Daniel Chatfield) #35

As far as I’m aware (and I’ve just skimmed the Mastercard docs again) an ATM just does a final auth. I can’t see anything in an ATM auth message beyond the final auth flag.


#36

In the US they used to have a week to authorise an ATM transaction! Maybe they weren’t connected to networks and did them in batches or something, the Americans always had slightly different rules (and it was some years ago, 11 Dec 2014, that I read their TPR doc). Assume Europe (and UK) more advanced, after all we did come out with EMV contactless before them.

EDIT: Obviously I’m tired, apparently that chargeback protection period was only applicable in Europe where the message reason code is 4808


#37

I might be missing something, and maybe this is obvious, but what are the practical implications of the payment guarantee period for your customers (ie us)?

Does it mean that after 7 or 30 days (depending on auth type) they can no longer collect the money, if they forget? I believe not?

Also, which of the two is more common, and can we as customers distinguish the two?

Do you treat them differently?

A bit more information would be appreciated here.


(Daniel Chatfield) #38

but what are the practical implications of the payment guarantee period for your customers (ie us)?

It’s the period that an authorisation will last before we’ll automatically reverse it. This is only likely to be noticable for things like hotel deposits where the hotel hasn’t explicitly reversed it. In these cases by default the auth will last for 30 days.

Does it mean that after 7 or 30 days (depending on auth type) they can no longer collect the money, if they forget? I believe not?

I wish! If they collect the money within the payment guarantee period then they are guaranteed it. The money can be collected after the payment guarantee period and by Mastercard rules the issuer has to attempt to honour the payment. We are able to issue a chargeback if the account being billed has been closed. In reality if a merchant/acquirer presents loads of payments a long time after the payment guarantee period expires then:

  • a proportion of customers will mistakenly claim it is fraud and they’ll lose some money
  • they’ll have a bunch of unhappy customers
  • if they do it a lot Mastercard will fine them

It’s rare that an acquirer does this and it is usually when they have a bug in their system which meant that the payment wasn’t collected on time.

Also, which of the two is more common, and can we as customers distinguish the two?

For us, final auths are more common as in general almost all card present transactions are final auths. Chip verified transactions have to be final auths unless the merchant is willing to sacrifice the liability shift that the chip provides. Almost all e-commerce transactions are preauths.

Do you treat them differently?

It affects how long the auth will last before being automatically reversed.


#39

Thanks! That’s really informative.


#40

I think their merchant chargeback fine is based on a % rather than a monetary amount, although they certainly used to also look at how new the merchant was (on the Mastercard scheme) and the size of their turnover.