Overview

This article explains the Purchase Returns Authorization (PRA) mandate as it applies to merchants processing refund (credit) transactions through Authorize.net. It covers how real-time refund authorization works, which processors and card types are supported, what merchants should expect when a refund is declined or results in a Settlement Error, and how to resolve common issues.

This article applies to: merchants using Authorize.net whose processor supports real-time credit authorization under the PRA mandate.

This article does not apply to: merchants using non-Authorize.net payment gateways or processors not listed in the supported processor table below.

What Is Purchase Returns Authorization?

Major card brands require that some refund (credit) transactions be validated via real-time authorization at the time the refund is attempted. This real-time authorization validates payment data and returns immediate feedback on whether the refund is authorized or declined.

Real-time refund authorization aligns refund processing with the authorization flow used for the original purchase. This means refund attempts can be declined by issuers for the same or similar reasons as purchase authorizations.

Benefits and Impacts

Understanding the PRA mandate helps you anticipate how refund processing may be affected. Key benefits and impacts include:

• Payment credential validation: Validates payment credentials at the time of refund, helping detect issues such as inactive or closed accounts.
• Immediate feedback: Provides real-time notification when a refund is accepted or declined, rather than learning about issues later through settlement or chargeback.
• Reconciliation impact: May reduce downstream reconciliation issues, but can also lead to more immediate refund declines when issuers do not authorize credits.

What You Should Know About PRA

Due to the PRA mandate, some issuers may decline refund transactions. How this appears to you depends on your processor and whether real-time credit authorization is supported.

Real-Time Refund Declines

Processors that support real-time credits — for example, First Data Omaha (FDCO) Host Capture — may return an immediate refund decline at the time of submission.

Settlement Errors

Processors that do not support real-time credits may allow the refund initially but later reject it during batch settlement, resulting in a Settlement Error.

Steps to Take When a Refund Is Declined or Returns a Settlement Error

1. If a refund is declined in real time, advise the cardholder to contact their issuer directly.
2. If a refund returns a Settlement Error, contact your Merchant Service Provider (MSP) — also referred to as your acquirer or processor — to review available refund options. Options vary by processor and route and may include alternate refund flows or manual reconciliation

Authorize.net Implementation Behavior

Authorize.net performs the refund authorization at the time of submission. You should verify expected behavior in your test and sandbox environments before deploying changes to your live integration.

Processor Support and Enablement

Support for PRA depends on processor implementation and Authorize.net enablement. The table below identifies currently supported processors, supported card types, and enablement status.

Note: Processor support may vary by card brand and transaction type. If your processor is not listed above, contact Authorize.net Support for guidance.

Troubleshooting and Common Scenarios

Real-Time Decline on Refund

Cause: The issuer declined the credit in real time.

Action: Advise the cardholder to contact their issuing bank. If appropriate and permitted, consider alternative refund options such as a manual refund or store credit.

Settlement Error on Refund

Cause: The refund was not accepted during the batch settlement process.

Action: Contact your acquirer or processor (MSP) to determine the cause and review next steps. Options may include alternate refund flows or manual reconciliation.

Frequently Asked Questions

• • Why was my refund declined?
  • Under the PRA mandate, issuers can decline refund (credit) transactions in real time for the same or similar reasons they would decline a purchase. This may be due to an inactive account, a closed account, or other issuer-side restrictions. The cardholder should contact their issuing bank for details.
• • What is a Settlement Error and what should I do if I receive one?
  • A Settlement Error occurs when a refund is initially allowed but is later rejected during batch settlement processing. If you receive a Settlement Error, contact your Merchant Service Provider (acquirer or processor) to discuss available options, which may include alternate refund flows or manual reconciliation.
• • Does my processor support real-time credit authorization?
  • Support depends on your processor and Authorize.net enablement. Refer to the Processor Support and Enablement table above. If your processor is not listed, contact Authorize.net Support.
• • Which card types are affected by the PRA mandate?
  • Supported card types vary by processor. Visa and Discover are supported across most listed processors. Mastercard and American Express support depends on the specific processor. Review the Processor Support and Enablement table for details.
• • When does Authorize.net perform the refund authorization?
  • Authorize.net performs the refund authorization at the time of submission. You should verify expected behavior in your test or sandbox environment before going live.
• • What options do I have if a refund cannot be processed?
  • If a real-time refund is declined, the cardholder should contact their issuer. If a Settlement Error occurs, contact your MSP to explore options such as alternate refund flows, manual refund processing, or store credit where permitted.
• • My processor is not on the supported list. What should I do?
  • Contact Authorize.net Support directly to determine whether PRA is applicable to your processor and what options are available.

Additional Resources

• Purchase Return Authorizations (PRAs) Developer Guide — Authorize.net

Glossary

• PRA — Purchase Returns Authorization: A card brand mandate requiring real-time authorization for refund (credit) transactions at the time the refund is submitted.
• MSP — Merchant Service Provider: The acquirer or processor that provides payment processing services to the merchant.
• FDCO — First Data Omaha: A payment processor that supports real-time credit authorization under the PRA mandate.
• FDC — First Data Nashville: A payment processor listed as a supported PRA processor for Visa, Mastercard, and Discover.
• RAG — Retrieval-Augmented Generation: An AI approach that retrieves relevant knowledge content to generate accurate, context-aware responses.
• TSYS: A payment processor supporting PRA for Visa, Discover, and American Express transactions through Authorize.net.
• Settlement Error: An error that occurs when a refund transaction is initially accepted but rejected during the batch settlement process.