Account Holder Refund

This guide explains what the account holder refund product is and how by using this automated process, a paper check can be issued to return remaining funds to an account holder once the account is canceled. Once the refund product has been configured, the check can be issued via the automated process outlined in this guide, or you can self-issue a check through the Customer Service Tool (CST).

The account holder refund process can be initiated by the account holder, or by the program manager. This guide contains the parameters to set during product configuration to optimize the experience for program managers and their account holders.

The refund product is for clients who need a solution to offer refunds for closed accounts.

Refund product process

The refund product process has five basic steps:

  1. You or the account holder decide to close an open account that contains a positive balance.
  2. You call the Modify Status endpoint to close the account. See Closing accounts in the About Accounts guide for more information.
  3. You present options to refund the balance before the account is closed. These options would already be determined in the cardholder T&Cs and cannot be changed. See Recommended sequence to refund closed accounts.
  4. After a configurable waiting period, the remaining balance transfers to a Galileo-owned refund account. Galileo recommends choosing a waiting period based on your standard authorization expiration times and any potential payment hold activity the client may initiate.
  5. Galileo issues and mails a paper check for the full refund amount to the former account holder.

Recommended sequence to refund closed accounts

Accounts may be closed for a number of reasons by you or by the account holder. When an account with a positive balance is closed, Galileo recommends that you present the following options to the account holder, in this order:

  1. Allow/encourage the account holder to spend the remaining funds. This process does not require setting up the refund product.
  2. Allow the funds to be obtained through an ATM withdrawal by the account holder. (Keep in mind the machine will only provide whole dollars, not cents. This may incur a loss on the part of the account holder).
  3. Initiate an ACH transfer of the remaining funds back to the account holder’s preferred financial institution. See Creating an ACH transaction in ACH Endpoints for more information. Galileo recommends you establish these options as part of your cardholders terms and conditions. We always recommend vetting and approval of your partner bank as your first step in this process. In some cases your partner bank may offer to mail refund checks, this is a good question to ask them in your vetting process.
  4. Use the refund product to offer the account holder a paper check via the Galileo refund product process.

Canceled with refund

Account status: C
If the account holder initiates the closure of an account with a positive balance, your terms and conditions should clearly outline the policy around when and how a refund will be issued.

Once the funds reach the Galileo refund account, Galileo issues the refund check, which includes:

  • The program name
  • The name the account holder
  • The full refund amount
  • Instructions for the account holder to cash the check with 180 days
  • Envelope labeled with Galileo logo and return address

If the check is not cashed or is returned to Galileo:
Funds are moved back into the refund account. If you have an updated address for the account holder, the address can be updated in the CST or via batch file and you can manually reissue a check.

Canceled without refund

Account status: Z
An account that is closed without a refund can be the result of a zero balance on the account, fraudulent activity on the card, or government seizure of the individual account holder’s assets. None of these scenarios require the use of Galileo’s refund product as no refund will be issued back to the account holder.

Refund product configuration

To configure the refund product, you will work with Galileo to set up the product. Your Galileo representative will provide best practices on the mandatory and optional parameters that will need to be set.

Information required to set up a refund product

You need to make adjustments to your public terms and conditions that outline what the refund process looks like for the account holder.

Galileo setup

These parameters are required to allow Galileo to process refunds for your customers and customize the experience to your program’s needs. All parameters are set at the product level.

ParameterDescription
CRCHKControls whether a card must be mailed back before a refund check is issued. This parameter is required when there is a refund product set up for this product. When this parameter is not set, accounts will not be refunded. This parameter is required when OGRAC is set. When this parameter is set to Y, MCTOB and MDAYC are required.
MCOTBContains the maximum amount for a refund check issued when an account is canceled. This parameter is required when there is a refund product set up for this product. When this parameter is not set, attempts to issue a refund are denied. Example: $5,000
MDAYCSpecifies the number of days after the last payment to issue a refund on an account that fails KYC/CIP. This parameter is required when OGRAC is set. When this parameter is set, MTOTB must also be set.
MDAYPSpecifies the number of days after the last payment to issue a refund on an account that fails KYC/CIP. This parameter is required when OGRAC is set. When this parameter is set, MTOTB must also be set.
MTOTBContains the maximum amount for a refund check that is issued when an account fails Galileo’s integrated KYC/CIP process. When MDAYP is set, this parameter is required.
OGRACSpecifies the refund account to debit when paying out a refund for this product. This parameter is required when a refund product exists for this product. When this parameter is set, RANAM is required on the refund account.
RANAMContains the name of the refund account that is specified in OGRAC. This parameter is set on the refund account, and it is required when OGRAC is populated on the product that uses the refund account. When this parameter is not populated and OGRAC is set, refunds are not processed.

Account holder refund workflow

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  1. You or the account holder close the account.
  2. If the account is closed without refund, you send a Modify Status request with type: 20. The account status is set to Z (closed without refund).
  3. If the account is canceled with refund, you send a Modify Status request with type: 13 and the account status is set to C (closed with refund).
  4. Galileo sends the NOTE: note event.
  5. For an account closed with refund, the waiting period starts. The configurable waiting period is set by MDAYC.
  6. Optional: the account holder may initiate an ACH request to withdraw funds before the waiting period is over.
  7. At the end of the waiting period, if there are still funds in the account, Galileo moves the funds out of the account. Galildo sends the BADJ: adj event.
  8. Galileo moves the funds into a refund account.
  9. Galileo issues and mails a paper check.
  10. The account holder receives the check.
  11. The account holder cashes the check within 180 days. If the check is not cashed in 180 days, the funds are immediately transferred back to the Galileo refund account. If you have an updated address for the account holder, the address can be updated in the CST or via batch file and you can manually reissue a check.

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