Mada Operating Rules Mada Operating Standards & Procedures Update on Refunds
No: 371000120070 Date(g): 22/8/2016 | Date(h): 20/11/1437 Referring to SAMA Circular No. 341000076614 dated 20/6/1434 H regarding the Saudi Payments Network Operating Rules and Regulations (Mada), which include the Refund service on POS terminals.
Attached is the updated document detailing the technical and operational rules and procedures for the Refund service for banks wishing to implement it and sign the agreement to activate the service for their merchant customers. Compliance with the outlined provisions is mandatory, and no fees should be imposed on the customer, merchant, or bank for this service.
For more information and coordination regarding this service, please contact the Mada team via their official website (mada.com.sa).
A. Introduction
1. This update is a part thereof and should be read in conjunction with the SPAN Operating Rules, V. 6.1.1 and SPAN Operating Standards and Procedures, V. 6.1. 2. As per section 15.5 in the SPAN Operating Rules, V. 6.1.1 the update is a minor change. 3. Any change as a result of this update takes effect from this document's official publication date. 4. Rules on Refunds apply to domestic debit Transaction only.
B. Update on Refunds
1. Refund: A Transaction that is initiated by a Merchant to return funds to a Cardholder in respect of a prior Purchase of goods, services or price adjustment. A return of residual value of funds in stored value payment instruments other than Cards does not qualify as a Refund as defined in the SPAN Operating Rules and SPAN Operating Standards and Procedures.
SAMA does not permit the use of a Reversal function for an authorized Purchase Transaction if it was followed by a subsequent Purchase Transaction with a new sequence number or is no longer in the POS terminal (Flushed from SAF or Reconciled). In this instance, a Refund must be used to credit the Cardholder's account.
2. If the 'Refund' function is offered or enabled for a Merchant by the Acquirer (bank), the terms and conditions relating to such Refunds must be clearly stated in the Standard Merchant Services Agreement (MSA). If the 'Refund' function is offered or enabled after the original MSA has been signed, the Acquirer may add an addendum to the existing valid agreement to cover the additional Refunds function.
3. A Refund Transaction is considered as new Transaction, and is subject to the SPAN Operating Rules, Standards, Procedures, and SPAN the Pricing Policy in that regard is No interchange, authorization, settlement or MSC fees are levied on a Refund Transaction.
4. The cardholder must receive the paid amount without any deduction (i.e. if the cardholder paid SAR500 for goods and requested refund; the cardholder should receive the full SAR500.
5. Issuers must provide Refund capability to Cardholders by default subject to the issuer's internal risk policies and procedures.
6. The issuer must decline the authorization of a Refund transaction request if no PIN verification is indicated in the authorization request message.
7. The Merchant must ensure that the Transaction amount of the Refund does not exceed the amount of the original Purchase and in all cases, a refund transaction must not exceed the daily purchase limit of PoS
8. A Refund Transaction may be processed Offline when Card and Terminal are enabled for Offline Authorization, subject to eligibility and Offline value limits.
9. The Refund amount must be in the same currency as the original Purchase amount.
10. Following the completion of a Refund Transaction, The Merchant must provide the Cardholder with a (Refund) Transaction receipt.
11. The refund capability should be disabled on all PoS terminals by default. The function should not be activated until:
a) the Acquirer has offered and the Merchant accepts inclusion of the function on their PoS service b) the Acquirer ensures that the Merchant fully understands the duties, responsibilities, related risk, fraud liability, and operating procedures relating to the Refund of transactions c) the Merchant has signed the Refund Agreement part of the MSA.
In exceptional circumstances, the Acquirer may elect to decline merchant request to activate the service based on the Acquirer's internal risk policies and procedures, subject to appeal by the Merchant to SAMA. The Acquirer may also disable the Refund function if the Merchant so requests.
12. Acquirers must ensure that their Merchants disclose their policies on returns and Refunds in a clear and visible format near the location of the POS Terminal, including clear references to documents required as proof of the original Purchase Transaction.
13. Following the clearing and settlement of the Transaction, the issuer will credit the Cardholder with the amount of the Refund as per the SPAN Operating Standards and Procedures. The issuer must ensure that the Refund amount is posted without delay to the Cardholder's account.
14. The timeframe for a Refund, being the period between the transaction date and the Refund date, is determined by the Merchant according to its internal policies and procedures (and may be subject to commercial (licensing) laws and regulations.
15. When a Refund is provided, the Merchant must credit the same Card account used to make the original POS Purchase. ?
16. Merchants that provide full or partial Refunds for SPAN Transactions must not do so through cash, check or voucher.
17. To authenticate the 'Original Transaction' the Merchant must ask the Cardholder for a Transaction receipt or similar documentation as proof of the original purchase transaction; if the original receipt is not available, the Merchant may fall back to its internal policies and procedures in deciding whether to proceed or not.
18. Merchants that provide full or partial Refunds must do so only for the purpose of crediting a Cardholder account for returned merchandise, cancelled services, or a price adjustment related to a previous POS Purchase.
19. In the event of overcharging a POS sale, Merchants must not use the Reversal function but use a Refund Transaction to return the difference to the Cardholder.
20. A Merchant that offers Cashback as part of an 'Original Purchase' transaction must not Refund the Cashback portion of the original Transaction.
21. The Acquirer must monitor Refund Transactions and report to SAMA if a Merchant exhibits repetitive, unusual or excessive Card Refunds. SAMA may initiate an investigation at its own discretion, subject to the SPAN Rules, Standards and Procedures.
22. Issuer Banks must ensure that the terms and conditions in the account opening and/or Card application documents state that, in the event of a Cardholder exercising their entitlement to a Refund, the Cardholder agrees to accept credits to his associated Card Account for such Refunds and agrees to the Refund policy of that merchant.
23. In the event where an attempted Refund Transaction is not completed (no advice is received by the issuer to enable a credit to the Cardholder's account), the issuer, on behalf of the Cardholder, may raise a claim through CPS if the issuer is satisfied with the authenticity of the concerned Transaction and supporting documents.
24. Merchants must Refund the (relevant proportion of the) purchase amount through one single refund transaction, not through multiple transactions.
25. Refund Transactions (and any associated fees) will be reported by SAMA in the normal SPAN activity and fee reports.
26. Refunds to Cardholders can only be performed at Merchants with valid agreements with Acquiring Banks and a POS Terminal compliant with the SPAN Operating Rules, Standards and Procedures and ‘mada’ POS Standards.
27. A merchant may choose to reimburse a SPAN Cardholder outside the SPAN network (i.e. a refund in cash or in kind). In such instances, the merchant accepts full responsibility for the Transaction and none of the SPAN stakeholders will have any liability for the Transaction. The Merchant may not fall back to the SPAN network for any dispute arising out of such a Refund.
28. The Standard POS Merchant Service Agreement must reference these Rules(?).
29. Merchants may cancel (void) a transaction provided it did not exceed the time allowed to effect a Reversal as per SPAN Operating Standards and Procedures1.
Beyond this time limit, the Merchant must use the Refund function described here.
30. The issuer Bank must notify the Cardholder via the Short Message Service (SMS) of the relevant details of any Refund Transactions in line with SAMA instructions.
31. The issuer must ensure that all Refund Transactions are shown on the Cardholder's account statement with adequate details that allow the Cardholder recourse if required.
1 SPAN Operating Standards and Procedures, Sections 5.3.2,5.4 and 5.4.2
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