What it means
When a customer pays by card, the sale is first authorised, which puts a hold on the funds. The business then collects authorised sales in a batch and sends them for settlement, usually at the end of the day.
A void cancels the sale before it joins that batch, so no money moves. Voids are common at the till.
A cashier may scan the wrong item, a customer may change their mind at the counter, or a keying error may need to be corrected. Voiding is quicker and cheaper than refunding, because the card network never processes a full payment and the business often avoids processing fees.
Once the batch has been settled, the sale can no longer be voided. The business must issue a refund instead, which creates a second transaction that returns the money, often with a delay of several days for the customer.
The refund can also leave the business paying fees on both the original sale and the return, depending on the provider's terms. Because voids remove sales from the record, they are a common focus for internal controls.
Unusual numbers of voids, especially by one employee or at one time of day, can be a sign of theft, such as pocketing cash after cancelling a sale. Most systems record who voided what and when, and may require a manager's approval.
Finance teams review void and refund rates as part of their routine checks. A high rate may point to training problems, faulty equipment, pricing mistakes or fraud, and each of these needs a different response.
Accounting treatment is simple. A voided transaction should not appear in revenue at all, whereas a refund appears as a reduction of revenue, so the distinction affects reported sales and the audit trail.
In practice
Real-world examples.
Example
A cashier at a clothing store scans a jacket twice by mistake and voids the second line before the customer pays. The receipt shows the correct total, and the voided entry is logged for the manager. Nothing is sent to the card network, so the customer is charged only for what they take home.
Example
A restaurant owner reviews the weekly report and sees that one server voided 14 orders on Friday evenings, far more than any colleague. After checking the till records and talking to the staff member, the owner discovers a pattern of voiding cash sales after customers had paid.
Example
An online shop's customer changes their mind a few minutes after paying by card. Because the batch has not yet been settled, the finance team voids the payment, and the customer's card is not charged. The order is cancelled in the stock system on the same day, so the item goes back on sale.
Formula
Calculation
Net settled sales = gross authorised sales - voided transactions - refunds
A shop authorises $50,000 of card sales in a month. Of these, $1,200 are voided at the till before settlement, and $800 are later refunded after settlement. Net settled sales = 50,000 - 1,200 - 800 = $48,000. The void rate is 1,200 / 50,000 = 2.4%, and the refund rate is 800 / 50,000 = 1.6%.Case study
Seen in the real world.
Coastline Cafe is an illustrative, fictional business with four branches and monthly card sales of $200,000. The finance manager reviewed monthly reports and noticed that voids at one branch were 6% of sales, compared with 1% at the others.
Looking at the detail, she found that most of the voids happened in the last hour of the evening shift and were approved by the same supervisor. The pattern suggested that cash sales were being rung up, then voided after payment, and the cash taken.
In this illustrative case, the company introduced a rule that every void needed a second person's approval and installed cameras at the tills. The branch's void rate fell to 1%, and the finance manager estimated that she had stopped losses of about 5% of $50,000 monthly sales, or $2,500 a month.
Watch out
Common mistakes.
- Treating a void and a refund as the same thing, when a void cancels a sale before settlement and a refund returns money afterwards.
- Letting staff void transactions without approval or a record, which weakens internal controls.
- Ignoring unusual patterns in void reports, which can be an early sign of fraud or training problems.
Questions
People also ask.
Can a void be reversed?
In most systems, no, since a voided sale is cancelled, and the business would need to ring up a new sale.
Why is a void cheaper than a refund?
A void happens before the payment is processed, so the business often avoids fees and the customer sees the hold released sooner.
How long do I have to void a card payment?
It depends on the provider, but it is usually only until the daily batch is settled, so check your terms.
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