Can you offer store credit instead of a refund?

Store credit can replace a refund only if your policy said so before the sale, and never on a cancelled online, phone or mail order. Otherwise the customer is generally owed money on the original card, and their bank can dispute under Visa reason code 13.6, credit not processed.

When is store credit allowed?

Store credit can always be offered as an extra option, and customers who choose it are fine. It is cheap for the merchant and often welcome to the customer. The trouble starts when a customer owed money on the original card is handed credit for the store instead.

Store credit should be the only option only when it was disclosed before the sale, in words the customer could not miss. Regulation Z, the US rule that governs card credit, does not require a merchant to refund returned goods. It does say that a merchant that routinely gives cash refunds must give credit or cash refunds to card customers unless it disclosed a different practice at the time of sale.

A store whose policy, posted before purchase, says that returns are for store credit only is within that rule. A store that has refunded cards for years and starts offering credit without notice falls outside it, because the rule looks to what the store routinely does and what it disclosed. Check today that any credit-only policy you run is posted before checkout.

What do Visa's rules say about refunds?

Visa's rules send refunds back to the card. Rule 1.5.4.14 of the Visa Core Rules requires refunds to go to the same payment credential as the original purchase where possible, and allows alternatives only when the original credential is unavailable. A closed account or an expired card can be such a case, but a merchant's preference for keeping the money in its own ecosystem does not qualify.

When a refund owed to the card does not arrive, the bank can raise reason code 13.6, credit not processed. Visa gives the issuer 120 days from the date on the credit receipt to raise it, according to Table 11-125. A customer who was offered store credit and refused it has no credit receipt at all, so the dispute rests on the original transaction and the promise of a refund.

Your response would then have to argue that a refund was never owed. That argument can only be built on whatever the policy said at the time of sale, so keep a dated copy of each version of your returns policy.

What about cancelled orders?

For orders placed online, by phone or by mail, the FTC's Mail, Internet or Telephone Order Rule says a seller cannot substitute store credit or scrip for a refund that is owed on cancellation. It also sets the timing: a refund within 7 working days, or a credit to the card within one billing cycle where the seller is the creditor. The rule covers cancelled orders, such as late shipments, and does not by itself decide the return of goods the customer no longer wants.

Where you could not ship, or shipped late, and the order was cancelled, the refund to the card is owed. Credit in that case is a substitution the FTC rule prohibits. Make sure whoever handles cancellations knows the 7-working-day limit.

How should a store credit policy be worded?

A good test for any policy sentence is whether it could be read aloud to a bank reviewer. "Returns are accepted within 30 days for store credit" can. "Refunds may be issued in the form we choose" cannot, since in our view a reviewer would read it as a refusal to refund.

Merchants who want to promote credit can offer a small bonus on top of the card refund. That keeps the customer's money on the card side and still brings them back. What the bank will ask to see if a customer disputes anyway is covered on the page for credit not processed under Visa 13.6.

Takeaway: what to do this week

1. Post any credit-only policy before checkout. Disclosure at the time of sale is what the Regulation Z exception depends on.
2. Refund cancelled orders to the card. Do it within 7 working days, or within one billing cycle where you are the creditor.
3. Rewrite vague refund wording. Replace phrases like "in the form we choose" with a plain sentence a bank reviewer could read aloud.
4. Offer credit as a bonus on top. A small extra alongside the card refund promotes credit without withholding money the customer is owed.

Sources: Visa Core Rules (18 April 2026), rule 1.5.4.14 and Table 11-125; FTC, "Business Guide to the Mail, Internet or Telephone Order Merchandise Rule" (edited January 2025); CFPB, Regulation Z, 12 CFR 1026.12(e). All checked 24 October 2026.