When a payment doesn’t go as planned, it can be confusing to know whether you should request a refund or raise a chargeback. Here’s how they differ:
REFUND
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What it is: A refund is when the business voluntarily returns the money to you, the customer.
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How it works: You contact the merchant to explain the issue. If approved, the payment is reversed and the funds are returned to your account.
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When to use: Wrong product or service, duplicate payment, cancellation within the T&C’s/Policy, or simple billing errors.
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Why it’s better: Refunds are quicker, keep the relationship smooth, and avoid extra bank charges and processes.
CHARGEBACK
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What it is: A chargeback is when you ask your bank or card issuer to reverse a payment. The bank investigates and decides whether to return the money.
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How it works: You file the claim with your bank, and the business is notified to provide evidence. This process can take between 120-180 days.
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When to use: If you suspect fraud, unauthorized use of your card, or you can not resolve the issue directly with the merchant.
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Why it’s different: Chargebacks involve banks, can take longer, and may carry extra fees or restrictions for the merchant.
Always try requesting a refund from the merchant first. It is faster and easier. If that doesn’t work or you believe the payment was fraudulent, then a Chargeback may be the right step.
Note: If you are a Payyo Merchant, check here what actions can be taken to reduce the number of disputes received and to protect the business