Pay First, Worry Later?
In Part 1, we looked at how prepaid cards work. You load the value first, then spend it. The money might come from your own pocket, your employer or someone who gave you a gift card.
But what happens when a payment goes wrong?
Say you’re paying ₹350 for lunch with your meal card. The payment fails, but your balance drops by ₹350 anyway. The restaurant says it hasn’t received the money. You check your card again. The balance is still lower.
Now what?
You haven’t bought lunch, yet you have less money available to spend. And until that amount comes back, you might have to think twice before using the card again.
Let’s look at what happens in situations like these, because the answer isn’t always the same.
When the Payment Fails
First things first: a failed payment doesn’t necessarily mean your money is gone.
Sometimes, an amount may be temporarily unavailable while the transaction is being resolved. What happens next depends on the payment system and how the transaction was processed.
RBI’s PPI directions address failed, returned, rejected and cancelled transactions. Where the original payment was debited from the PPI, the applicable refund must be credited to that PPI as specified in the directions. A refund shouldn’t be credited to the PPI if the original payment was made using another instrument.
So, if your balance hasn’t been restored, don’t just keep refreshing the app. Contact your issuer with the transaction reference and ask them to trace the payment. The time taken to resolve it can depend on the transaction and the applicable rules.
What If You Cancel?
Let’s say your lunch payment goes through this time. But the restaurant cancels your order.
The payment succeeded. Now you’re waiting for the restaurant to return your money.
This is where things get a little different. A failed payment and a refund might both end with value returning to you, but they aren’t the same thing. In one case, the payment didn’t complete as expected. In the other, the merchant needs to refund a payment that went through.
And where should that refund go?
That depends on the prepaid product and the applicable terms. If you paid using your meal card, check with the restaurant about the refund and ask your issuer how it will be credited. If the restaurant says it’s already processed, ask for the refund reference so the issuer can trace it.
A refund confirmation is a start. It doesn’t necessarily mean the amount is already available on your card.
What If You Didn’t Pay?
You check your balance and find a transaction you don’t recognise. You didn’t make that purchase, and nobody you know should have used your card.
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This is no longer about a payment that failed or an order that was cancelled. It could be an unauthorised transaction, and you should report it to your issuer immediately.
A few things to do:
- Report the transaction through the issuer’s official channel.
- Keep the complaint number and transaction details.
- Follow the issuer’s instructions to secure your card or account.
The rules for unauthorised transactions depend on the type of prepaid product and its issuer. Bank-issued and non-bank PPIs don’t necessarily follow identical customer-liability provisions. Where the applicable framework provides for a temporary reversal, that isn’t automatically the final resolution of the complaint.
Don’t wait until you’ve figured out exactly what happened before reporting it. That’s what the investigation is for.
When You Disagree With a Charge
There’s another situation worth looking at. You recognise the payment, but something about it isn’t right. Perhaps the restaurant charged you twice, the amount was incorrect or you paid for a service you never received.
You can start by contacting the merchant. If the issue remains unresolved, speak to your prepaid card issuer about the options available to you.
Some prepaid cards operate on card networks and may support a chargeback. This is a formal process for challenging an eligible card transaction through the applicable network rules. Other prepaid products may not offer this route.
A chargeback isn’t the same as a refund. The merchant processes a refund, a chargeback follows a separate dispute process and may require evidence. Whether it succeeds depends on the circumstances and the applicable rules.
So, before assuming you can raise a chargeback, check with your issuer. The process available to someone using a general-purpose prepaid card may differ from the options available to someone using a restricted-use product, such as a meal card.
So, Where’s Your Money?
When a prepaid transaction goes wrong, it’s easy to lump everything together and ask for a refund. But the first step is to work out what actually happened.
- Was the payment unsuccessful?
- Did the merchant cancel a completed purchase?
- Was the transaction unauthorised? Or
- Do you disagree with a charge that went through?
Each situation calls for a different response, and the options available depend on your prepaid product.
The thing to remember is that your balance is more than a number on the screen. It’s the value you have available to use. When a transaction goes wrong, you need to know what happened to that value, how it can be restored and who can help you resolve it.
That’s a good place to start.
