New use cases for Mastercard refunds

Mastercard recently updated its rules to widen the scope of refund transactions beyond purchase returns. This change may mean reduced costs for the below use cases, since refunds usually offer lower transaction fees vs Card Payouts.

Return of unspent crypto and securities purchases

Gambling and gaming merchants can already use refunds to return unspent funds if a customer changes their mind before spending their balance, or in response to a fraud claim. 

Mastercard has expanded this use case to cryptocurrency and securities merchants for the same purposes, provided that:

• The merchant is not using the refunds to pay out winnings, earnings, or other proceeds
• The refund relates to an earlier purchase that the cardholder made in the last 90 days‍

Refund of value-added tax (VAT) or similar taxes

In some cases, cardholders that make retail purchases while travelling abroad may qualify for a VAT or local tax refund for their purchases. 

Mastercard now allows merchants authorized by a government authority to return these taxes to tourist via refunds, provided they first try to return funds using an unreferenced fast refund, where supported.

If the merchant’s country or territory doesn’t support fast refunds, merchants can default to a refund as the first return mechanism.‍

Return of product packaging deposits‍

Some jurisdictions encourage re-use or recycling of bottles, cans, and other packaging by adding a deposit fee to the original purchase price. Mastercard now allows merchants to use refunds for returns of these deposit fees, provided they first try to return funds using an unreferenced fast refund, where supported. If the merchant’s country or territory doesn’t support fast refunds, merchants can default to a refund as the first return mechanism.