Difference Between Refund and Reversal Transaction (2024)

FAQs

Difference Between Refund and Reversal Transaction? ›

In a refund, the merchant returns the money to the customer's account, and the transaction is considered completed. In a reversal transaction, the bank or payment processor cancels the transaction, and the funds are not transferred from the customer's account to the merchant's account.

Reversals are generally processed almost immediately since they occur before the transaction is finalised. On the other hand, refunds can take several days as they involve returning funds after completing the transaction.

What does payment reversal mean? The term payment reversal applies to any transaction when payment funds are returned to a cardholder's bank. A payment reversal can be initiated by the cardholder, merchant, issuing bank, acquiring bank, or card network.

In the case of a reversal, the original charge drops off the customer's statement, and a separate credit isn't issued. Refunds can fail if the customer's bank or card issuer has been unable to process it correctly. The bank returns the refunded amount to us and we add it back to your Stripe account balance.

Refunds are final

Once a refund is made, it's not possible to reverse it.

A chargeback is a return of funds to a customer's card account after they dispute a card payment on their statement. A refund is a repayment of a sum of money. A reversal revokes a previous transaction. Businesses must process a payment reversal if they don't receive an authorization response.

Chargebacks are bank-initiated transaction reversals that withdraw funds deposited into your merchant account and return them to the cardholder. Refunds are merchant-led, voluntary repayments to the customer.

Once a refund is issued, it cannot be reversed. To initiate a new charge, the credit card or direct debit account must be charged again, and reprocessing the transaction will require the full credit card or account number.

To initiate a refund, you will need to reach out to the business directly. Stripe is unable to issue refunds on behalf of businesses using Stripe to accept payments.

For a short window of time after creation, some card refunds support cancellations via the dashboard. The refund must not have been processed as a charge reversal. If cancellation is no longer available, you would need to create a new charge for the customer in the amount of the refund in order to recoup the funds.

Can I reverse a debit card payment? ›

The chargeback process lets you ask your bank to refund a payment on your debit card when a purchase has gone wrong. You should contact the seller first, as you cannot start a chargeback claim unless you have done this.

Basically, a refund is a complete reversal of the original payment against the original payment card. By law, that is all that is required of the merchant.

A bank reversal, sometimes known as an ACH Return, is when a bank requests us to reverse a PayPal payment. Usually, the request is due to suspected unauthorized use of the bank account. The request can come from the bank account owner or the bank itself.

Payment reversal is an umbrella term describing when transactions are returned to a cardholder's bank after making a payment. They can occur for the following reasons: Item sold out before it could be delivered. The purchase was made fraudulently. The customer changed their mind about the purchase after paying.

A payment reversal, also known as bank reversal, is a request to cancel a transaction and return the funds to the original payment method.

: to give back money that someone paid for something (such as a product that was returned or a service that was not acceptable) If you are not completely satisfied, we will refund the purchase price.

A refund is when you send the full or part payment amount back to a customer who placed an order on your online store. A return is when a customer returns an item that they purchased from your online store. You can send return instructions to the customer and provide a return shipping label.