What is the difference between a chargeback and a refund?

Side by side

• Who starts it. A refund: you. A chargeback: the cardholder, through their bank.
• Who decides. A refund: you. A chargeback: the cardholder's bank, under card network rules; your processor passes the case on but doesn't decide it.
• Fees. A refund: no dispute fee. A chargeback: Shopify Payments takes the amount and a fee straight away ($15 in the United States); Stripe charges a dispute fee ($15 in the US), plus a $15 counter fee when you respond, which is returned if you win.
• Your ratio. Refunds are not disputes, and monitoring programs don't count them. Chargebacks count when they arrive, whether you win or lose.
• Your time. A chargeback needs evidence that fits the reason code, usually within 7 to 21 days.

When a refund is the better move

• An inquiry. A full refund closes it without a dispute fee.
• An early fraud warning on an order you haven't shipped. Refunding avoids the dispute and its fee. The Visa fraud report still counts toward VAMP, but the order counts once instead of twice.
• A real mistake. If your records show you charged twice or the wrong amount, refund it.

Once a chargeback is filed, answer it rather than refunding: see chargeback after a refund.

Reason codes this answer covers

• Visa 13.6: Credit Not Processed: often winnable