Refunds

Refunds

There could be situations when customers request a refund of the payments made for the products or services purchased or availed on your website or app.Depending on the time that you wish the refunds to be processed for your customers, you can opt either for:

• Normal Refunds where it takes 5-7 working days for the refunds to reach your customers.
• Instant Refunds where the customers receive their amount almost immediately.
  By issuing instant refunds to your customers, you can provide a better user experience for them. This also helps in improving their reliability and trust in your business.

How Refunds work?

When you make a normal refund request to Razorpay, the information is conveyed to banking partners or other related stakeholders. Each of them has its own mechanism to file the refund request, map it to their respective payments that were originally made and then take it forward. On completion of this process, the refund is sent back to the customer's bank account or card balance.

A typical flow for card refunds is illustrated below:

Payment Methods

We support all payment methods for normal refunds.Refunds will be sent back to the original payment method used in making the payment. For example, if a credit card was used to make the payment, the refund will be pushed to the same credit card.

Processing Time

When you send a normal refund request to Razorpay, the information is conveyed to our banking partners. Depending on the bank's processing time, it can take 5-7 business days for the refunds to reflect in the customer's bank account or card balance.

The time taken to process a normal refund depends on the payment mode that was used while making the payment.

Refund Fees

For normal refunds, Razorpay does not charge any processing fee. However, the transaction fee and GST levied by Razorpay at the time of payment capture will not be reversed to your account.

How Instant Refunds work?

When an instant refund request is sent to Razorpay, the refunds are processed instantly by our system. The customer receives the refund within minutes (or an hour, sometimes) on their original payment source.

A typical flow for instant refund is shown below:

Payment Methods

We support the following payment methods for instant refunds. The list of banks that support instant refunds differ according to payment methods.

• Credit Cards - List of supported banks
• Debit Cards - List of supported banks
• Netbanking - List of supported banks
• UPI - List of supported banks

Refunds will be sent back to the original payment method used in making the payment. For example, if a credit card was used to make the payment, the refund will be pushed to the same credit card.

Processing Time

For all credit card transactions, the time taken depends on the amount to be refunded:

Refund Fees

Razorpay charges a small transaction fee to process instant refunds. Fees will be deducted directly from your account balance and shall be reflected on the Refunds tab in the Dashboard. In cases where instant refund fails and the refund takes 5-7 working days, the levied fee is credited to your balance. The fee break-up is shown in the end-of-the-month invoice generated by Razorpay. Details are available in the Instant Refunds Reports downloadable from the Razorpay Dashboard.

Issuing Refunds

You can issue refunds to your customers using the Refunds API or from the Dashboard.Refunds are possible for captured payments only. Refunds can be made either in full or in part:

• Full RefundYou can refund the entire amount that you received in the payment.
• Partial Refund - You can refund part of the amount received in the payment. You can issue multiple, partial refunds as long as their sum does not exceed the captured amount.

A payment moves to the refunded state only when the entire amount is refunded to the customer. In case of partial refunds, the payment continues to remain in the captured state till the entire payment is refunded.

Handling Chargebacks for Refunds

For the prevention of chargebacks, Razorpay only does source refunds. It means that money is refunded to the payment method that the customer used to make the payment. For example, if a credit card was used to make the payment, the refund will be pushed to the same credit card. Similarly, in the case of UPI payments, the refund is pushed to the VPA used while making the payment.

If a chargeback is received for an instantly refunded payment, the processed refund will have a UTR (Unique Transfer Reference) in the callback. This UTR appears against the ARN (Application Reference Number) parameter in the Refund entity. The UTR serves as a proof of refund completed between you and Razorpay.

Additionally, Razorpay passes the RRN (Razorpay Reference Number) of the payment in the Fund Transfer Request sent for the Refund. This ties the instant refund back to the parent payment, thereby serving as a proof of the refund. This data can also be used as a defense against a future Chargeback or Arbitration case.

Handling Chargebacks for Refunds

For better visibility and tracking of Refunds in the Refund process, Razorpay will send email notifications to you and your customers. You will receive email notifications for:

• Refund Initiated - An email is sent as soon as a Refund is initiated. This indicates that a refund request has been conveyed to the banking partner.
• RRN Updated - Once the Refund Reference Number (RRN) is received from the partner bank, you and your customers will receive an email with the RRN for the specific Refund ID. This indicates that the refund request has been accepted and processed by the partner bank. RRN can be shared with the customer's bank for further escalation in case they don't receive any credit within 5-7 working days. In most cases, you and your customers will receive an RRN Updated email within 1-2 working days.