Why does reversal from banks (especially SBI) not occur when transaction fails at POS but amount gets debited? What can we do to tackle this?

You’ve experienced a failed digital payment where the money gets debited to customer’s bank account / credit card account but the Merchant claims he hasn’t received the payment and refuses to ship / handover the ordered goods / services. Failed payments are quite common in online payments but your question shows that it also happens in instore / POS payments.

Failed payments fall into a “CyberAbyss” of sorts, which comprises Collection Account of Merchant, Nostro Account of Sender Bank at Scheme Operator, Nostro Account of Beneficiary Bank at Scheme Operator, Internal Collection Accounts at Sender Bank and Beneficiary Bank, Scheme Operator Account, Unintended Beneficiary’s Account, and dozens of other nooks and crannies in the payment value chain.

Some Merchants / Issuers care about Customer Experience and / or use sophisticated tools. As a result, they will ferret out failed payments from the CyberAbyss and reprocess them. Others don’t and won’t, so they will remain stuck in the CyberAbyss.

Consumers of the first cohort will get their money back in their accounts automatically within a few days. Consumers of the second cohort will be made to run from pillar to post between the Issuer and the Merchant for several months to get a refund.

Hope you belong to the first cohort and good luck if you’re in the second.