How a refund works
The merchant issues the refund from its dashboard, API or terminal, against the original payment and for up to its amount. On cards, the refund is a transaction of its own, a credit, cleared and settled like a purchase in the opposite direction, so the money reaches the cardholder some days later.
A refund can be full or partial, and one payment can be refunded in several parts. The acquirer takes the amount from the merchant's next settlement or from its balance.
What the rules say about refunds
In the EU, a trader reimburses a consumer who withdraws from a distance contract without undue delay, and not later than 14 days after being told of the withdrawal. The trader uses the same means of payment as the consumer did, unless the consumer has expressly agreed otherwise (Directive 2011/83/EU, Article 13). The UK's Consumer Contracts Regulations 2013 set a 14-day limit and the same-means rule in regulation 34.
The Visa Core Rules of 18 April 2026 require a merchant, to the extent possible, to process the refund to the same payment credential as the original transaction (1.5.4.14).
What refunds mean for a payments business
Refunds reduce what a merchant is owed, sometimes after the money has been paid out, so a PSP needs a policy for negative balances and a ledger entry that links each refund to its payment. The fees on the original payment are often not returned to the merchant.
Refund, void or chargeback?
- Void
- Cancels a payment before it settles, so no money moves. A refund returns money that has already moved.
- Chargeback
- Started by the cardholder through the issuer, under scheme rules. A refund is the merchant's own decision.
- Payment reversal
- The general word for undoing a payment. A refund is the reversal used after settlement.
Where a refund shows up in a platform
Modules that do the work
- Card acquiringCard acceptance on the phone, in store and online, through the acquirer you choose.
- CheckoutA hosted checkout for cards, wallets, bank payments and crypto, routed to the best provider.
- LedgerThe double-entry book of record behind every balance, fee and transfer.
- BackofficeOne console to run the platform: customers, money, risk, content and staff permissions.
Platforms that need it
Where it is written
The laws and standards this page's facts come from.
- Directive 2011/83/EU on consumer rights, Article 13 (EUR-Lex)
- The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, regulation 34 (legislation.gov.uk)
- Visa Core Rules and Visa Product and Service Rules, 18 April 2026: 1.5.4.14 (Visa)
General information, not legal advice: what applies to you depends on your services and your market.