Published In The Great North Arrow, February 1, 2024: Credit Card Refunds

 - jim Young

"What's good for the goose is good for the gander." - anon

I applied for my very first credit card when I was still in high school. When my application was approved I received in the mail, a credit card for Canadian Tire that was made out of cardboard and had a credit limit of $100.

I suppose it was possible that the cashier might make a clerical error when manually filling in the account number from these cardboard credit cards, voiding the transaction and making it impossible for the oil company or department store to bill the customer, however I was never lucky enough to have that happen to me. 

But that possibility was eliminated when plastic cards with embossed numbers and swipe machines that imprinted a carbon copy of the account number onto the credit slips were introduced.

The magnetic strip was the next advancement in credit cards which not only improved accuracy and allowed the collection of more data but also significantly reduced processing time.

In days gone by, depending on how quickly the department store manually processed their credit receipts, your transaction might go a week before even reaching the credit card company. Depending on the date of the billing cycle even more time would pass before your statement would be sent out by snail mail. If you timed your purchase right, you might not have to make a payment or start accumulating interest for well over a month.

As online banking progressed however, the transactions became instantaneous and your only opportunity to delay payment now involves coordinating your purchase date with the billing cycle and the payment due date. So, you can probably still get up to a 28 day grace period before payment is due and interest charges start accumulating, which is kind of the whole idea of the credit card in the first place.

Now, if you make a purchase at Walmart or any other retail outlet, by the time you can punch your password into your phone, the charge will most likely already appear in your credit card account.

What I’ve never understood however, is why the reverse process isn’t the same? If I return an item for refund, why doesn’t the refund also show up on my account instantly?

Walmart (and other retailers) will often explain that once an item has been accepted for refund, it may take awhile for the credit to be processed and then, depending on the financial institution you deal with, it could be another 3 to 5 business days to show up in your account.

It’s as if the money is in limbo for a few days. Where did it go? Who’s collecting interest on it? I know it’s not me.

Interest for a few days on a $100 refund may not seem like a lot, but multiply that by thousands of refunds processed daily and it’s nothing to sneeze at.

Why can’t a refund be processed as quickly as a debit?

I’ve never received a satisfactory response to that question and have recently discovered the answer is… there is no answer. Apparently a refund can be credited just as quickly as a purchase can be debited.

And here’s how I know.

We recently made a trip to Walmart in Sudbury to return 2 articles of clothing that were a Christmas gift for My Shirley. 

As a little side note, when purchasing clothing for my wife and I’m not sure of the size, I always choose the smaller size. I’ve only got a 50-50 chance of getting it right anyway, but I have learned that choosing a smaller size is a compliment. Choosing a size too big… not so much.

The cashier at the Sudbury Walmart did not give me the usual spiel about waiting 3 to 5 business days to see my credit appear on my statement, but I didn’t think anything of it at the time.

To Walmart’s credit, I have always eventually received my credit after the promised 3 to 5 business days and have never had to chase my refund. However good that track record may be, it still does not instill enough faith in me to not feel the need to follow up. When I got home I went to enter a note in my computer’s calendar to remind me to follow up in a few days.

Imagine my surprise then, when I checked my bank statement and for the first time, saw my credit was fully processed the same day!

The Sudbury Walmart and whatever financial institutions they deal with have set a dangerous precedent here. If THEY can process a credit as quickly as a debit, my expectation going forward will be that EVERY retailer and financial institution can do the same.

Afterall, I now have proof they can.

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