Credit card transactions carried out through a POS may sometimes need to be reversed for one reason or another. These reversing transactions are called a cancellation (void) or a refund.
So what is the difference between a cancellation and a refund?
If the batch (end of day) has not yet been closed on the POS after a card transaction, a CANCELLATION can be performed. When a cancellation is done, the card's limit returns to its previous level — in other words, the sale transaction is treated as if it never happened.
If the batch has already been closed on the POS after a card transaction, a REFUND can be performed instead. After a refund, the card's limit returning to its previous level can take approximately 1-5 days, depending on the bank's processes.
For a transaction made on a physical POS to be cancelled, the card must be physically inserted into the POS again.
For a refund to be performed through the POS, the POS must have refund authority enabled. If the POS does not have refund authority, the merchant must forward the refund request to the bank it works with.