Whether at a brick-and-mortar store or online, purchasing is extremely frictionless and simple, but refunding an item is a different experience. However, refunds are a big part of the payment ecosystem. One-fifth, or $1.4 trillion, of everything purchased is refunded. TodayPay is looking to fix this broken part of the sales experience.
"Refunds are a massively inflexible, broken part of the payments ecosystem. And I want to see if we can fix this," said TodayPay's founder and CEO Jeremy Balkin, in an interview with PYMNTS.
Benefits of Instant Refunds
Refunds can take days or weeks to appear on your credit card. A series of events must occur before a refund is issued, and the time varies from merchant to merchant. Some merchants want full verification that the item has been returned before issuing a refund. This can mean checking that the item has shipped, arrived at the warehouse, or been verified by the seller. Consumers are left guessing when all of this may be finalized and their money returned.
TodayPay will give consumers a choice of where they want their funds returned. It isn't restricted to just the source of payment. Additionally, consumers will have more insight into returned products through tracking and expectations of when their funds will be returned.
These faster refunds are paid through interchange fees and gratification fees charged to merchants who choose to offer multiple return payment options.
Fraud is always an issue with returns. Customers attempting fraud may return an empty box or invalid product, causing merchants to pay interchange fees regardless, plus loss of sales revenue. With instant refunds, merchants can inspect returned products while funds are on hold, helping decrease fraud.
Consumer Expectations
With so many consumers living paycheck to paycheck, getting money back quicker can make a big difference and instill loyalty with merchants offering instant refunds. Because this option severs the card rail, consumers don't have to worry about money being returned to a canceled, expired, or stolen card.
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