What is a Refund?

When a customer buys a product our service and after asks for his money back so the merchant needs to make a reimbursement.


What is a Refund?

Credit card use in online purchases has increased and is today one of the most popular online payment methods. There are other different payment options used by customers when paying online; for example, in Latin America, a common and popular payment method among shoppers are the voucher payments, such as the Boleto Bancário.

Merchants who want to expand their business to new markets should take note that payments are often accompanied by possible refunds, and this happens regardless of the payment method used, so when choosing a payment processor, it's important to think about having the necessary support to deal with refunds. 

Think of the following example: A consumer returns a t-shirt or a cell phone, and their money is refunded on their credit card. Have you ever stopped to think about how the entire process flows through different players until it finally returns back to their original account?


How a refund is processed?

The customer can ask for a refund regardless of the payment method used to make the purchase. But the most common refunds are credit card refunds, which have a slightly different refund process.

Credit Card flow in Latin America

Alternative Methods flow in Latin America


Can all consumer purchases be refunded?

A consumer cannot receive a refund if the merchant’s return policy does not apply to the specific case; for example, the purchase took place at a later date than the period covered in the policy or the reason for the return is also not stipulated in the return policy.  There are, however, many other situations that allow customers to request refunds of their purchases:

Consumers can receive a refund when:

  • They are returning an item

  • The transaction is incorrect 

  • There are multiple transactions 

  • The vendor entered the incorrect price 

  • The vendor provided the consumer with a faulty product


How long does it take to receive a refund?

A consumer refund is not always displayed on their credit card or bank account instantly. In fact, it can take upwards of a few days to reflect the refund on the next credit card bill. This depends on when the purchase was made when the refund was requested, and if the purchase was made in installments.

A delay can also take place because of the steps above. Not only does the merchant and the processor need to receive the refund request, but the credit card must also go through the steps necessary to ensure the refund is valid and the correct amount is reflected back on the consumer’s card.


Things to consider during the refund process

Whether a consumer requires a refund because their t-shirt is too large or they have simply changed their mind, the best way to receive a refund is to work with the right payment partner. Count on a payment processor who understands customer behavior has direct connections with local banks and acquirers and gives complete support for you and your customers. This support can truly be a game changer in guaranteeing the continued success of your business.