Refund vs chargeback: what's the difference?

What is the difference between a refund and a chargeback?

Who starts it. You issue a refund from your own balance. A chargeback starts when the cardholder disputes the payment with their card issuer, and the card network takes the money back before anyone decides who is right. The issuing bank makes the final decision.

How do the costs compare?

On Stripe's standard US pricing:

Stripe's refund docs state that the processing fees from the original transaction aren't returned. Example: on a $1,108.33 card installment at 2.9% + 30¢, the fee is $32.44. Refund it and the $32.44 stays spent. Have it charged back instead and Stripe takes the $1,108.33 plus the $15 dispute fee, and $15 more if you counter and lose.

Can a customer dispute a payment you already refunded?

By card, not if you refunded it in full. Stripe says customers can't dispute fully refunded payments. A partially refunded payment can still be disputed, and card network rules allow it to be disputed for the full amount.

By ACH, yes. Stripe warns that a refund doesn't stop a bank dispute. If you refund while the customer's bank also processes a dispute, the customer may receive two credits for the same payment.

Can you refund during a chargeback?

Not by card. While a dispute is open, you can't issue a refund outside the dispute process. If you agree the customer should keep the money, Stripe recommends accepting the dispute.

How do ACH refunds work on Stripe?

• Window: up to 180 days from the original payment.
• Time: up to 3 business days to complete. They can't be canceled.
• Full refunds only. Partial ACH refunds aren't supported.
• Separate credit: an ACH refund always arrives as its own credit, never as a reversal, and isn't labelled as a refund on the statement.

Tell the customer before you refund a bank payment, so they don't also file a dispute.

How long does a card refund take?

Stripe says customers see a card refund as a credit about 5 to 10 business days later, depending on the bank. A refund can only go back to the original payment method.

What should a payment plan do?

• Refund before a dispute starts when the customer is owed money, such as a withdrawal under your refund policy.
• Refund only the installments owed. Each installment is its own payment, so you refund each one separately.
• Confirm in writing for bank payments, with the expected timing.