A refund returns all or part of a completed payment to the payer. It is normally initiated by the merchant or recipient after the original transaction has settled and should remain linked to that transaction. A refund differs from a void or reversal, which may stop or unwind the original entry.
How is a refund amount determined?
A practical calculation is refund amount = refundable transaction amount − non-refundable charges − value already retained for delivered goods or services, subject to the agreement and law.
What should the refund record contain?
Keep the original payment reference, payer, currency, approved amount, reason, authorization, refund reference, provider status and date funds are confirmed returned.
Full versus partial refund
A full refund returns the eligible amount of the transaction. A partial refund returns only an approved portion and leaves a residual paid balance that must reconcile with the invoice or order.
Refund versus chargeback
A refund is initiated through the merchant or recipient process. A chargeback is raised through the card or payment dispute mechanism and may involve separate evidence, deadlines and fees.
What should operations verify?
Confirm the destination is the original payment method where required, prevent duplicate refunds and do not treat an initiated refund as completed until provider or bank evidence confirms the outcome.
