Glossary
Refund vs chargeback: what is the difference?
A refund is money the merchant returns to the customer voluntarily, usually after a return or cancellation. A chargeback is a reversal the cardholder starts through their issuing bank under card scheme rules, often with a fee for the merchant and a count towards dispute monitoring. Refunding quickly when a customer is entitled to it usually costs less than fighting a chargeback.
- Refund vs chargeback
- A refund is a merchant-initiated return of funds; a chargeback is an issuer-initiated reversal of a card transaction under card scheme dispute rules.
What are the main differences?
The difference is who starts the process and which rules apply.
| Aspect | Refund | Chargeback |
|---|---|---|
| Started by | Merchant | Cardholder through their issuer |
| Rules | Your terms and consumer law | Card scheme dispute rules |
| Merchant fee | Usually none or the provider's refund fee | Usually a chargeback fee from the acquirer |
| Dispute ratio | Not counted | Counted in scheme monitoring |
| Can you contest it? | Not applicable | Yes, with evidence within scheme deadlines |
When does a customer file a chargeback?
Common reasons are fraud the cardholder does not recognise, goods not received, goods not as described, and refunds promised but not processed. Clear descriptors and fast refunds prevent many of them.
How do you manage refunds and chargebacks?
OrsunPay is a payment orchestration platform: you keep your own contracts with licensed providers (for example Stripe, Adyen or Worldpay), and OrsunPay is not a payment institution, acquirer or merchant of record and does not hold or transmit funds. OrsunPay lets you issue full and partial refunds across connected providers from one place and tracks disputes in reporting. For OrsunPay pricing, see the pricing page at /pricing.
Frequently asked questions
Can a customer file a chargeback after a refund?
They can try; you then respond with proof of the refund within the scheme deadline.
Do bank transfers have chargebacks?
Card-style chargebacks do not exist for credit transfers; SEPA direct debits have their own refund rights.
Is a refund faster than a chargeback?
Usually yes: a refund is processed in days, a chargeback can take weeks or months.