when a credit or debt card transaction takes place the merchant s point of sale pos terminal relays that information electronically through a card network if the network determines that the card is valid and the customer s bank determines that there are enough funds or sufficient credit in the account to cover the charge the terminal authorizes the transaction these steps which usually take place in a matter of seconds are known as authentication and authorization 
but the transaction is not finished until a later step called settlement when payment is released from the customer s account and transmitted to the merchant s bank if there appears to be a problem with the transaction it can be voided up to this point and the money will not move transactions may be voided for a number of reasons perhaps the customer has changed their mind about a purchase and asked the merchant to void it or the merchant may have noticed a mistake of some sort and proactively voided the transaction once voided the transaction will show up on the customer s account as a pending transaction and then disappear after a certain amount of time pending transactions put a hold on the money that can last anywhere from 24 hours to several days that can be an inconvenience for the customer because they won t be able to access the money during that time if they need to use their card again 1a void transaction generally takes place on the same day as the original transaction examples of void transactionsmistakes can be easily corrected by voiding transactions if they are recognized immediately for example a shopper who has just paid for their items at a grocery store might pick up their bags and discover that the cashier accidentally included some of the next customer s items the cashier can void the transaction re scan the correct items and charge the customer the correct amount some merchants may allow a certain window of time to cancel a purchase if the customer changes their mind this often occurs with e commerce sellers where a buyer might have the option to cancel an online purchase within 24 hours if they do the seller will void the transaction the buyer won t be charged and the goods won t ship potentially fraudulent charges can also be voided card issuers have fraud detection procedures to flag suspicious transactions before they can be completed most card companies will place these transactions on hold until the customer can verify whether the transaction was legitimate if the customer says it wasn t the company can then void it when a customer cannot be reached for verification many card companies will automatically void a suspicious transaction before it is settled because refunds are issued after the money has already passed through a customer s account to the merchant the process can take longer than with a void transaction void transactions vs refundsvoid transactions are different from refunds with void transactions the transaction is stopped before any money is transferred from the customer s account to the merchant s refunds however are issued after a transaction has settled and the merchant has received payment some merchants and credit card processing systems may settle transactions immediately when a transaction settles immediately the seller can only issue a refund rather than voiding the transaction compared with void transactions refunds can take much longer to complete some refunds may be reflected in the cardholder s account within 48 hours but others can take as long as 30 days 