What is a chargeback and how does it differ from a refund? | MULENPAY

A chargeback is a forced reversal of a payment initiated by the buyer's bank when the customer disputes the transaction. Unlike an ordinary refund, which the merchant issues themselves, a chargeback happens without their consent: the bank or the payment system decides, based on the evidence submitted.

How a chargeback differs from a refund

The difference is who starts the process and who decides the outcome.

• A refund is started by the merchant: the customer contacted support, the store agreed and returned the money. Fast, with no dispute and no penalties.
• A chargeback is started by the customer through their bank. The merchant is informed after the fact and asked to prove the transaction was legitimate and the obligations were met.

For a business this matters: a refund is routine, a chargeback is a conflict that has already moved beyond a conversation with the customer.

How the process runs

1. The customer files a claim with their bank and states the reason for the dispute.
2. The issuing bank sends the request through the payment system.
3. The merchant is notified and given a deadline to respond.
4. The merchant collects evidence: order confirmation, proof of delivery or service, correspondence, refund terms.
5. The payment system rules on the case. If the merchant misses the deadline, the dispute is decided in the customer's favour automatically.

Common reasons

• The customer did not recognise the transaction on their statement — for example, it shows an unfamiliar company name.
• The goods were not delivered or the service was not provided on time.
• What arrived does not match the description.
• The merchant ignored a refund request.
• Fraud: the card was used by someone other than its holder.

How to reduce chargebacks

• Use a clear billing descriptor the customer will recognise on their statement.
• Publish refund terms and delivery times where they are visible before payment.
• Reply to enquiries quickly: most chargebacks are a support conversation that never happened.
• Keep your evidence: receipts, tracking numbers, acceptance certificates, access logs for digital products.
• Enable 3-D Secure — for an authenticated transaction, liability for a fraudulent payment shifts to the issuing bank in a number of cases.

How disputes are handled at MulenPay is set out in the refund and chargeback policy; to start accepting payments, see online payment acceptance.