What is a Refund?

Refund represents the procedure of returning funds from the Merchants who initiated the Payment Requestto the Customers who performed the Payment Commit. Typically, the Refund is performed using the same Payment method that was previously used for the Payment Commit. However, there are some exceptions when the funds are returned with different credentials, such as when the Payment method is unavailable or expired.

Full Refund VS Partial Refund

Our system currently supports two types of Refunds depending on the user needs and the corresponding business cases.

Full Refund

Full Refund defines the flow when the original Transaction amount is fully paid back to the Customer who performed a Payment Commit. It is typically used when dealing with cancellations, returns, and errors. It greatly helps to influence Customer satisfaction if the purchase process is unsuccessful and does not go as expected.

The Full Refund feature becomes useful for such use cases:

1. Customer is dissatisfied with an order: The Merchant makes a Refund for a Customer if the product quality is not as expected or the product was not delivered.
2. Order is cancelled: The order was cancelled before it was processed or delivered, depending on the established Merchant’s preconditions.
3. Service failed: The Merchant could not provide the service or product with the appropriate quality.
4. The Transaction is duplicated: The Customer is charged twice for one Transaction due to the technical issues on the Provider side.

Partial Refund

Partial Refund enables a similar workflow for returning funds, yet the preliminary amount should be partially returned. The actual returned amount depends on the situation in which the Merchant and Customercommunicate the related conditions. This type of Refund is mostly applicable when the Customer returns the part of an order, receives a defective product or gains a discount after the purchase is finalised.

Partial Refund feature becomes useful for such cases:

1. Partial return of goods: The Customer returns one or more products from one order.
2. Price adjustments: The Customer is informed about the price adjustment after the purchase is made.
3. Compensation for defective items: The Customer receives the faulty product, but instead of a return, the Merchant offers partial financial compensation.
4. Service was not fully provided: The Partial Refund is paid if the service is not entirely fulfilled.

More Business cases for Refunds

This overview covers the Refund cases that may appear as a general rule and depicts the overall idea of when a Refund can serve its purpose.

1. Direct funds return via Transaction: The Refund is processed directly using the same Payment method used by the Customer for the initial Transaction.
2. Create a Payout from your Merchant: The Refund is initiated when issuing the separate Payout to the Customer account instead of reversing the preliminary Transaction.
3. Refund via cash: The Refund is made via cash, mostly for in-person Transactions without involving electronic means and relying on processors.
4. Refund on the Provider side: The Refund is handled on the Payment Provider side if it presupposes any restrictions or rules for the funds return.

Full & Partial Refund → Benefits comparison

As Full and Partial Refunds allow you to make communication with Customers smoother and more flexible, the difference between those two features outlines the specific benefits to compare.

Refunds VS Chargebacks

Refunds and Chargebacks are often perceived as similar procedures but with different reasoning and financial impact. Thus, let’s consider comparing those two notions to review their related and contrastive characteristics.