Delayed refunds

With any refund you are entitled to fast refunds…or it seems so…
But then they say it will take 5-10 working days blaming the bank system?
So for up to two weeks they have your money and considering the amount of refunds could add up to hundred of thousands of dollars which is invested in the over night cash market and big money is made at everyones expense…
Who actually holds the money the company or the bank?
Which one profits from this scam?
Certainly not the consumer who is entitled to a swift refund…
Money comes out of your account quickly and lands in sellers account…instantly so why not in reverse?

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Hi @Malev57, welcome to the community.

I also originally though that business must be withholding funds to make more money from the ‘over night cash market’, but, having run our own business and also having worked for small and large organisations in the past, I realise that this isn’t the case.

The first point to make is that business bank accounts often don’t accrue interest on monies. This means that if the monies are in the business account, it won’t make the business any additional money. It may assist with cashflow however.

The second point to make is that it can take a day. week or up to a month to get refunds processed. The reasons for the time is as follow:

  • say you present a credit/debit card and the refund is processed directly to the credit/debit card. The time that the monies return to your account will be dependent on the batch processing of the credit card company/issuer. Historically transactions are processed overnight when congestion on banks electronic infrastructure is at a minimum. This means that it could take 1-2 days for the monies to be returned (one day for the credit card company to process the transaction to transfer funds and potentially another day for the bank to also process the transaction to deposit the funds in one’s account).
  • say you contact a business and they say they will reverse the charge and refund the money. This is a manual operation and if done say the same same day, would still have potentially a 1-2 day delay before it is seen in your account. If they process such reversals weekly etc, this time is added to the 1-2 day delay.
  • say you contact an business and they will electronic funds transfer (EFT) the funds into your nominated account. This could take days, weeks or even a month for the transfer to be actioned by a business. Many business have fixed timeframes for processing transactions (pay runs, payment of creditors etc) and these are done as a batch job after a set period (week, fortnight, month). I have worked within businesses which have done them weekly, fortnightly and monthly (and sometime longer - it was possible to get a transaction actioned quicker, but this required manual processing and in one case, management approval). This time is added to the 1-2 days outlined above. There is an exception for EFTs, if they use New Payments Platform (NPP) for the transfer. Then the amount will occur as soon as the batch is processed.

With purchases using cards, the money is debited against the account in many circumstances instantaneously. This is so purchased can be approved based on the funds available in one’s account or remainder of one’s credit card balance. If this wasn’t done. one could easily exceed their credit card limit or overdraw on their account. Even though money is debited against the account instantaneously, it often takes 1-2 days for the actual transaction to appear in one’s account, due to dot point 1 above.


An additonal bullet point for a situation most of us experience from time to time, adding to @phb’s list:

  • If an original charge is [still] shown as ‘pending’ on one’s account it has been approved and the funds ‘locked’ but the charge is not fully processed by the merchant side. If a refund is processed prior to the ‘pending’ status being cleared there is nothing to refund against (yet) so a refund will not be processed until the original charge has been fully completed (eg no longer in pending status). That is usually 3-7 business days for a pending to be cleared so a refund can be processed against it, hence what appears to be delays.

Some merchants business operations charge in realtime and have systems that complete their transactions in real time, and usually issue refunds similarly quickly. Others, such as Colesworths for example that preauthorise, do not and operate per my additional bullet point.

There are related topics about issues with preauthorisation in a number of other topics such as how the grocers process online orders to differences between debit and credit cards,and the potential ramifications on consumers that result.



  • some businesses deal with a LOT of transactions per day (per employee) so it takes time to process the list with due diligence
  • businesses have to deal with potential scammers trying for fake refunds all the time, so they take time to verify a transaction’s details are legit
  • some businesses need to make sure a sent product that was returned has been received before releasing the refund (very variable)