A refund is when the merchant agrees to return an amount of funds back to the customer's credit card. This could happen when the customer has returned the goods, or is unhappy with their purchase and the merchant provides a partial or full refund.
A dispute occurs when the cardholder contacts their card issuing bank directly to challenge a charge on their credit card statement. Reasons for this could include:
- The card details were used without their authority (i.e. fraud)
- The cardholder contacted the merchant for a refund but didn’t get a response
- The goods/service provided were not as described
Read our blog post Understanding risk for small businesses accepting payments online for more information on disputes.