A credit card purchase that a seller cancels after it has been authorized but before it has been settled. A void transaction does not appear on the customer’s credit card statement, though it might appear in a list of pending transactions when the customer checks their account online.
A situation that might require a void transaction is if a grocery store customer who has just paid picks up her bags and realizes that the cashier accidentally included some of the next customer’s items in her purchase. The cashier could void the transaction, re-scan only the correct items, and charge the customer the correct amount.
BREAKING DOWN 'Void Transaction'
A void transaction is different from a refund. In a void transaction, no money is ever actually transferred from the customer’s credit card company to the merchant. In a refund transaction, money has been transferred and must be transferred back. A void transaction can cause problems for customers because even though the seller canceled the transaction, the customer may find that their card has a hold on the amount of funds involved in the canceled transaction. The hold can last several days, and the cardholder won’t be able to access the money during that time. Refunds can also take a few days to post to a customer’s account, so regardless of whether the transaction is voided or refunded, it can create a temporary inconvenience for the customer. For these reasons, it’s important for merchants to charge customers correctly the first time.
A seller will refund a transaction rather than voiding it when the transaction has already settled. Some credit card processing systems settle transactions immediately. When the transaction settles immediately, the seller will have to issue a refund rather than void the transaction even if the customer notices a mistake immediately after signing the credit card slip. Another situation where the seller would not be able to void the transaction but would have to issue a refund instead is if a customer placed an order online and the merchant didn’t realize the requested item was out of stock until the following day when the order went to the warehouse for fulfillment but the payment had already settled.