> Being able to make money off the refund is a probable reason why they are even offered.
I think you vastly overestimate the amount of interest a retailer can make on that money vs. the cost of processing the refund, potentially not being able to resell already unpacked goods etc.
Purchases and refunds are also cleared and settled exactly as quickly, i.e. usually on the next business day.
I don't know many businesses that would perform processes that don't make them money. Even if we use your example of next business day what happens on a Friday where the refund isn't processed until Monday or Tuesday? Is customer satisfaction really increased if you get their refund back to them in 3, 7 or 10 days?
In instances where you have to ship the defective product back. They don't send you an over-night, next day label to get the product back to them as soon as possible. They send it ground. So you paid for a product, you then wait for the product, you then call to get a refund, you ship it back, they receive and process and then you get refunded your original amount. That could be two weeks, even though your refund was settled next business day.
I'd be surprised if any retailer takes a loss with a refund that they can't send back to the manufacturer or write off.
It also seems that there isn't any set refund time limit and varies per state in the US.[1]
> Even if we use your example of next business day what happens on a Friday where the refund isn't processed until Monday or Tuesday?
The same thing that happens when you make a purchase on a Friday: It most likely gets posted to your account the following Monday. No clearing (or at least settlement) on the weekend goes both ways.
I'm specifically talking about refunds not purchases as in US only a few states have laws relating to returns and refunds.[1] Otherwise its left up to the retailer to set the policy. Most purchasers are not making large amounts of interest on their checking accounts compared to the balance amounts a business would carry. If no settlement happens on the weekends I can see a large advantage to a business holding one million dollars in refunds for two extra days before you complete or run the batch job of refunds.
When I make a purchase I don't get to decide when to run the batch job for it to post/settle. Retailers however can determine when they want to actually process refunds. What can a customer complain about when the posted refund shows up on the following Monday, Tuesday, Friday, two weeks later?
To further my point of retailers not being incentivized to process your refund quickly there was a small study done that delaying refunds had customers "re-spending" the refund before it had fulled settled.[2]
I think you vastly overestimate the amount of interest a retailer can make on that money vs. the cost of processing the refund, potentially not being able to resell already unpacked goods etc.
Purchases and refunds are also cleared and settled exactly as quickly, i.e. usually on the next business day.