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Special Report: Why refunds take so long

Part of the appeal of shopping is knowing that if you change your mind, you can take your item back.

If you're using a card, places usually say it'll take 3 to 10 days to get your money back.

So why does it take so much longer than when you buy something?

We reached out to a lot of places, trying to find out why.

Retailers, like Best Buy, Walmart, Target, and Amazon say many times they credit the money back on your card within 24 hours of the return.

Visa says there's a number of steps that they take after they get that credit back from the store.

First, they must verify the purchase history, confirm the refund request from the store, then they have to clear the refund with the store's bank to finally put the money back in your bank.

That sounds like a lot of steps but payment experts say that because of computers, that process takes seconds.

Banks like Wells Fargo and E.E.C.U. say as soon as the money gets back to them, it is immediately put back into your account.

The Better Business Bureau says laws let stores and banks take their time to get the money back to you.

BBB Spokesperson Kayleena Speakman said, “It's up to the merchant, they have their own policy they go by and then they release it to the bank, and the bank has their own policy as well and they're allowed to do that, and they're allowed to hang on to their money for any reason.”

But if they took your money that fast, why can't they give it back to you just as fast?

Mark Horwedel has worked in payments for banks and stores for 45 years. He says a 50-year-old system is to blame for the delay.

“The problem isn't those banks; the problem is the banking system. The system that uses card networks which moves the money so slowly through the ACH, and doesn't use real-time authorizations to credit customer's accounts is the thing that is at fault.”

Horwedel says when you "buy" something, banks use a "real-time, online" system to immediately take the money from your account.

But when it comes to adding money to your account, like when you return something, instead of immediately crediting your account, they use a different process to move the money called a "batch system" that was originated for checks in the 60's and 70's.

Then the batch goes from one bank to another and can take two, three, or more days before returning the money to you.

Horwedel said "It's a complicated topic but the fix for the problem is not that complicated. Everybody understands when I use my card to buy something that the money comes out immediately. So it makes no sense that that credit can't go over the same online system and credit my account immediately so I can use those funds immediately.”

Horwedel says places like Merchant Advisory Group have been working for 20 years to get the banks to change their credit process to real-time.

He says the card companies, like Visa or Mastercard, have the power to set-up rules where banks have to change their system to give real-time credits to people like they do with real-time debits.

Until that happens, the Better Business Bureau says you could also try the old fashioned way.

Speakman said, "See if they'll let you take the refund in cash. Some stores may actually allow that even if you've paid as a debit or credit card you can ask for a cash refund that way you don't have to wait for the money to clear into your account."



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