Blind Credit

« Back to Glossary IndexA Blind Credit is a credit (refund) that is issued/applied to a transaction which is not currently accessible or available to be referenced against. Essentially it is a refund that is given for a transaction whose transaction ID number cannot be located - which means that it may or may not […]

A Blind Credit is a credit (refund) that is issued/applied to a transaction which is not currently accessible or available to be referenced against. Essentially it is a refund that is given for a transaction whose transaction ID number cannot be located - which means that it may or may not have actually occurred.

When a credit (refund) is processed money is given to a specific account and tied to a transaction ID.

Blind Credit Examples

Let's look a couple quick examples that will make it easy to understand blind credits.

Example 1 - Low risk merchant processing

John buys a computer with his credit card.

John doesn't like his computer, and decides to bring it back to the store for a return & refund.

When John returns to the store to get a refund for his computer the store can use his credit card to reference the transaction ID number and provide him a refund in exchange for the purchased computer. Merchant processing technology allows merchants to credit (refund) money back to a credit card by referencing the original transaction ID number, by issuing a credit (commonly known as "issuing a refund").

Sometimes stores cannot locate the original transaction ID number.

If the store cannot locate the original credit card transaction, but wants to honor the refund for John, they can still process the refund using a blind credit.

Payment processing technology allows merchants to credit (refund) money back to a credit card without referencing the original transaction ID number, by issuing a blind credit. It's blind because the store cannot see the original transaction ID.

But what if John is a friend of the cashier, and together they want to make some money - couldn't John just have his cashier buddy issue a ton of blind credits to his credit card, or by loading up gift cards, to get money for things he never purchased in the first place? Yes he could.

In a sense a blind credit is like giving a refund for something that may or may not have never happened, similar to just giving away free money, potentially.

For this reason, merchant account providers usually do not allow merchants to utilize blind credit functionality by default.

Example 2 - High risk merchant processing

A scenario where it's most common for a merchant account provider to issue a blind credit would be if a merchant loses their merchant account, and they need to refund a transaction.

In the high risk arena it is not uncommon for merchant accounts to get turned off or closed, but the merchant may still need to process refunds for customers. If a merchant's account is closed they would not have the ability to issue a refund, so instead they would need to issue a blind credit through a new/different merchant account.

Blind credits are typically done on a case-by-case basis, and typically after being evaluated by the business's Merchant Account Provider.

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