Refunds vs Chargebacks

A refund is a choice you make. You send money back because the customer asked, your policy requires it, or you want to keep them happy.

A chargeback is different. It’s a forced reversal started by the customer’s bank (the issuer) after the customer disputes a card charge. The bank pulls the funds back through the card network, and your acquiring bank and processor pass that debit to you. Most of the time, you also get hit with a chargeback fee that may not be returned even if you win.

Here’s a simple way to think about it: a refund is a store return, a chargeback is a bank stepping in as referee, and the bank can take the ball back.

Topic	Refund	Chargeback
Who starts it	Merchant (or customer request)	Cardholder’s bank (issuer)
Money movement	Voluntary credit back to customer	Forced debit from merchant via network
Fees	Usually none (beyond processing rules)	Often includes non-refundable dispute fees
Outcome control	You control timing and messaging	Controlled by issuer rules and timelines