Returned/unprocessed payments keep being marked as credits and cleared payments, despite never hitting the bank. My accounts are already linked.

It's nice to see you posting your concern in the QuickBooks Community, @zoe-tyrus-tv. I've got some information you need to handle your customer’s credit in QuickBooks Online. 

If you want to offset a customer’s credit, then I suggest creating a check that affects the accounts receivable.

Here’s how:

1. Click the + New button.
2. Choose Check. If you're in Business view, follow the steps to switch to Accountant view. Then, come back to these steps.
3. Select the customer you want to refund from the Payee drop-down arrow.
4. From the Payment account drop-down, choose the bank account to where you deposited the overpayment or credit.
5. On the first line of the Category column, select Accounts Receivable.
6. Enter how much you want to refund in the Amount field.
7. Fill in the other necessary fields.
8. Hit Save and close.

 
Once done, you'll have to link the check to the customer's credit so the customer's balance shows zero. Please follow the steps below.

1. Choose the + New button.
2. Select Receive payment.
3. Choose the same customer you used for the check or expense when recording the refund.
4. Fill out the other fields.
5. Select the checkbox for the Expense or Check you created when recording the refund below the Outstanding Transaction section.
6. Make sure the payment is equal to the open balance.
7. Click Save and close.

 
I'd appreciate any additional details you can provide regarding your concern. This way, I can share accurate information with you.

Also, you can view this article to view further information on how you can apply the available credit to another entry so this will show as zero: Handle a customer credit or overpayment in QuickBooks Online.

For future reference, I'll share with you this link if in case you’ll want to record a customer refund if a customer overpaid you on accident.

Keep me posted if you still have questions or concerns with your customer’s credit in QBO. I'll be around for you. Have great day!

This issue should not have a work-around so convoluted.  As it clearly states in the screencaps attached, the payment was disputed and, ultimately, rejected.

Yet it was marked in Quickbooks as having been deposited, despite never hitting our bank.

I cannot refund or delete the payment that, as I have stated, already failed and was marked as failed in the accounts.

I will attempt the above workaround, but ultimately deleting the transaction or simply not recording the failed deposit in the first place would be expedient.

This did not work.

Thanks for getting back to us, @zoe-tyrus-tv. I appreciate you coming back to the QuickBooks Community to share additional details about your concern.

To make sure this issue with payments in QuickBooks Online gets sorted out, feel free to reach out to our merchant support team for further assistance. This way, they can pull up your account and investigate this issue further. 

Moreover, let me share this resource to guide you on what to do if you have chargebacks and retrieval requests: Handle chargebacks and retrieval requests for QuickBooks Payments.

If you need additional help with processing QuickBooks Payments, please let me know by adding a comment below. I'm always here to help. Have a good one!

The chatbot had already recommended the Handle Chargebacks link and I did not find it helped with my concerns.