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Handling refunds

When it comes to online payments, refunds are an essential part of handling transactions. There are two types of refunds that can occur: merchant-initiated refunds and customer-initiated chargebacks. In this article, we will cover both types and how to handle them using the IXOPAY platform.

Refunding payments​

Merchant-initiated refunds happen when a merchant wants to return funds to a customer, either in part or in full. This can happen for various reasons, such as the customer being dissatisfied with the product or service they received.

To initiate a refund, the merchant needs to send a request to the IXOPAY platform with the transaction details, including the amount to be refunded and the referenceUuid of the transaction that transferred the funds to the merchant's account. You can refund debit and capture transactions. If a preauthorize transaction was used, it has to be voided, see Place a hold on a payment for details.

Availability

Some payment methods do not support refunds or don't support partial refunds. Make sure to check the adapters page for details on the supported refund functionality for each payment method.

Here's an example of a refund transaction API call:

curl --request POST -sL \
  --url "https://gateway.ixopay.com/api/v3/transaction/${API_KEY}/refund" \
  --header 'Content-Type: application/json' \
  --header 'Accept: application/json' \
  --header "Authorization: Basic $(echo -n "$USERNAME:$PASSWORD" | base64)" \
  --data-raw '{
    "referenceUuid": "4d40738b1194869734f7",
    "merchantTransactionId": "your-unique-identifier",
    "description": "Purchase description shown on credit card statement.",
    "amount": "9.99",
    "currency": "EUR",
    "successUrl": "https://shop.example.org/checkout/success",
    "cancelUrl": "https://shop.example.org/checkout/cancelled",
    "errorUrl": "https://shop.example.org/checkout/error",
    "callbackUrl": "https://api.example.org/callback"
  }'

Chargebacks​

Customer-initiated chargebacks occur when a customer disputes a charge on their card statement. This can happen if the customer did not authorize the charge or if they believe the charge was fraudulent. Chargebacks can be costly for merchants, as they often incur a fee from the acquirer.

To handle chargebacks, merchants need to be notified when they occur. This can be done through Callbacks set up in the IXOPAY platform or by using the transaction status API call. The transactionType of a chargeback transaction is CHARGEBACK. Once a chargeback occurs, the funds from the transaction are returned to the customer, and the merchant may be required to provide evidence to dispute the chargeback.

Chargeback reversals​

In some cases, a chargeback may be reversed if the customer's dispute is resolved in favor of the merchant. This is known as a chargeback reversal. The funds are returned to the merchant's account, and the fee incurred from the original chargeback may be reversed as well.

Chargeback reversals are handled in the same way as chargebacks: either using Callbacks or by using the transaction status API call. The transactionType of a chargeback transaction is CHARGEBACK-REVERSAL.

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It is important to note that refunds are generally the preferred method of handling disputes, as they are typically less expensive than chargebacks. However, in cases where chargebacks cannot be avoided, it is important to be aware of the process and have the necessary tools in place to handle them.

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