refund

Refunds are routine, and the detail that catches businesses out is cost. When a card payment is refunded, the money goes back to the card, but the fees charged on the original payment may or may not come back depending on the acquirer's terms and the scheme's rules on interchange. A business running a high-refund model, such as deposits or pre-orders, should know its refund terms before it signs.

For a software platform, refunds are where the ledger earns its keep. On a split payment, the platform's fee has to be refunded or retained by a rule, the seller's balance has to cover the refund or go negative, and the customer's records have to show a credit against the right invoice. Refund controls, such as who may issue one and up to what amount, are part of what we mean by payment products, and a common reason a customer prefers payments built into the software they already use.

What to watch: Direct Debit has its own refund route, the Direct Debit Guarantee, under which the payer's bank refunds first and claims the money back from the collecting organisation. A refund a business did not initiate is a chargeback, not a refund, and is handled under the dispute rules.