Chargebacks are not the same as for refunds, however, they can both result in a credit for a failed order or a fraudulent charge on your account. As a result, you may file a chargeback with your credit card company to dispute the charge.
When you have charged a payer and need to cancel the payment and return the funds to the payer, you must issue a refund. The monies will be restored to the original payment method (credit card, bank account) used by the payer to make the payment.
Within nine various themes, let’s take a deeper look at some of the contrasts between chargebacks and refunds.
| REFUND | CHARGEBACK | |
|---|---|---|
| COMMUNICATION | You and your customer work together to identify a solution that benefits you both. | Your customer bypasses you and discusses the problem with the bank instead. |
| CLARITY | Your customer tells you exactly what’s wrong so you can solve the underlying issue. | You have to make adjustments based on assumptions that may or may not be accurate. |
| REVENUE LOSS | You are aware of the upcoming revenue loss and can plan for it. | Funds are forcibly removed from your account without any warning. |
| MERCHANDISE | The customer may be willing to return the merchandise so you can try to sell it again. | You can’t ask the customer to return the merchandise since you’ve been omitted from the conversation. |
| REPUTATION | Refund counts are monitored, but they are a relatively low indicator of risk. | Chargebacks are meticulously scrutinized, and penalties are quickly issued if activity increases. |
| FEES | You probably won’t be charged a refund fee. | Chargeback fees are common and expensive. |
| RESOLUTION | From beginning to end, refunds are usually completed within a week or less. | If a case progresses through all five stages of the chargeback process, it can take months to reach a final verdict. |
| TIME | Refunds are usually quick and easy to execute. | Chargeback management is a time-consuming process. |
| EXPERTISE | You need very few skills or insights to issue a refund. | You need extensive |