A refund is the repayment of funds, typically to an unsatisfied client. Refunds are a regular part of e-business, offering compensation to customers for accidental over-invoicing and returned products. Issuing refunds in due time and keeping communication channels open for customers are paramount to successful e-business and brings benefits to merchants beyond reputation and customer satisfaction.
Refunds are not to be equated with chargebacks. The main difference is WHO initiates the transaction reversal. Chargebacks are initiated by card-issuing banks and constitute the result of fraud suspicions or disputed transactions. High chargeback ratios usually entail the labeling of merchants as high-risk, when working with payment service providers. High refund ratios are not even taken into consideration by payment processors and acquiring banks. As long as you settle all disputes directly with your customers, everybody is happy.