A Guide to Transaction Types and Codes

Every action in the payment lifecycle, from a simple purchase to a refund, is identified by a specific transaction type code. Understanding what these codes mean is essential for managing your transactions, reconciling your accounts, and handling customer service issues correctly.

Here is a detailed breakdown of the common transaction types you will encounter.

Debit (DB)

• What It Is: This is the most common transaction type for a standard, one-off purchase. It debits the customer's account and credits your merchant account in a single step.
• Common Use Case: A customer buys a product from your online store and pays for it immediately.
• Key Note: This process combines the authorisation and capture of funds into one action.

Pre-authorisation (PA)

• What It Is: This action validates the customer's card and reserves (blocks) the purchase amount on their account without immediately debiting it. The funds are held by the customer's bank pending a final action from you.
• Common Use Cases:
  • Online stores that only want to capture the funds when the order is shipped.
  • Hotels or car rental companies placing a temporary hold for a security deposit.
  • Validating a customer's card details before starting a subscription or free trial.

Capture (CP)

• What It Is: This is the second step after a Pre-authorisation (PA). A Capture "collects" the funds that were previously reserved on the customer's card, triggering the actual movement of money to your account.
• Common Use Case: You have an order that is now ready to ship. You perform a Capture on the original Pre-authorisation to finalize the payment.
• Key Note: A Pre-authorisation will expire if it is not captured within a certain timeframe (usually 7 days).

Reversal (RV)

• What It Is: A Reversal is used to "void" or cancel a transaction before it has been settled. This effectively stops the payment from ever being completed, and the transaction will typically not appear on the customer's final statement.
• Common Use Case: A customer places an order but calls to cancel it on the same day, before your transactions have been settled.
• Key Note: In the South African context, a Reversal should only be used to cancel a Pre-authorisation (PA). Using a Reversal on a completed Debit (DB) is incorrect and can lead to scheme penalties.

Refund (RF)

• What It Is: A Refund is used to send funds back to a customer for a payment that has already been completed and settled into your account.
• Common Use Case: A customer returns a product they have already paid for, and you need to send the money back to their card.
• Key Note: Unlike a Reversal, a Refund is a new transaction that credits the customer. Both the original Debit and the subsequent Refund will appear on their statement.

Rebill (RB)

• What It Is: A Rebill is a transaction that debits a customer's account with reference to a previous successful transaction, using a securely stored token.
• Common Use Case: This is the standard method for processing recurring payments, such as monthly subscriptions, memberships, or payment plans, where the customer has given you consent to charge their card on a schedule.
• Key Note: The first transaction in a subscription is usually a Debit (DB), and all subsequent scheduled payments are Rebill (RB) transactions.

Chargeback (CB)

• What It Is: This is a forced reversal of funds initiated by the customer's bank after the customer disputes a transaction.
• Common Use Case: A customer might initiate a chargeback for reasons like alleged fraud, non-delivery of goods, or dissatisfaction with a product when a resolution could not be reached with the merchant.
• Key Note: Chargebacks are a formal dispute process that can be costly and time-consuming for merchants. Having clear policies and using security features like 3D Secure is the best way to prevent them.

Credit (CD)

• Credit (CD): This transaction type credits a customer and debits a merchant. It is not available to merchants and should not be used.

Receipt (RC)

• Receipt (RC): This is a less common transaction type that confirms a positive booking on a merchant account, typically related to manual payment methods like wire transfers or specific invoicing setups, rather than standard card processing.