A cancellation applies to a transaction that has not completed its financial cycle: the funds were held on the card but never captured. A refund applies to a completed payment: the money was taken and has to be sent back. For the customer the difference shows in timing — a cancellation releases funds faster.
What a cancellation does
When a customer pays by card, the bank first checks the card and holds the amount — that is a block on the funds, not a capture. Until the merchant confirms the transaction, the money stays in the customer's account but cannot be spent.
Cancelling removes that hold. The money never reached the merchant, so there is nothing to send back — the bank simply releases it.
What a refund does
A refund is a separate financial operation in the opposite direction. The merchant starts it after the payment has been confirmed and counted towards their turnover. It can be full or partial — for example, when the customer keeps one item out of three.
Choosing the right operation
| Situation | What to do |
|---|---|
| Customer changed their mind right after paying, status not final | Cancel |
| Order confirmed, money captured, item did not fit | Refund |
| Item out of stock before shipping | Cancel if the payment is not settled, otherwise refund |
| Customer returned part of the order | Partial refund |
What matters for the business
- Treat the server-side payment status as the source of truth, not the "payment successful" screen.
- Publish refund terms and timelines before checkout — it reduces disputes.
- Do not stall: a refusal or silence usually ends in a chargeback, where the bank decides instead of you.
How refunds work at MulenPay is described in the refund and chargeback policy; the operations themselves are visible in the dashboard — see accepting payments.
