What is a chargeback? (and how it differs from a refund)

A refund and a chargeback both end with money going back to the customer. The path is completely different, and the difference matters to you as a seller.

Refund: you decide

A refund starts with you. A customer writes, you agree, and you return the payment through your payment system. You are in control, you can speak to the customer, and the relationship can survive.

Chargeback: the bank steps in

A chargeback starts with the customer's bank. The buyer tells their card issuer, "I do not recognise this charge," or, "I never got what I paid for." The bank opens a dispute. Your payment provider then asks you for your side of the story, and the money may be pulled back while the dispute is decided.

You did not choose this path. You find out after it began.

An illustrative Rs 800 order

Say a customer pays Rs 800 for a hand-painted tray by card. It arrives, and she is unhappy with the colour. Two ways this can go:

• She messages you. You offer a refund of Rs 800, send her a return label and she agrees. Done in a few messages, and she may even order again.
• She skips you and calls her bank. The bank raises a dispute for Rs 800. Your payment provider emails you for evidence. You now must prove what you shipped, when, and what you told her, while the Rs 800 is in question.

In the second case, you may also have the tray in hand or in transit, so you could lose the product and the money. I am not going to quote timelines or fees, because they depend on your payment provider and the card network. Ask your provider directly, and read what they publish.

What helps you in a dispute

Evidence is your friend. Keep, for every order:

1. The order confirmation and what the customer saw on the product page.
2. Proof of dispatch and tracking.
3. Proof of delivery.
4. Chat history showing what was agreed.
5. Photos of the item before packing. See photographing the packing process as proof.

How to avoid reaching this point

Most chargebacks start with a customer who felt ignored. A few habits reduce the odds:

• Answer messages quickly. Handling where is my order messages quickly helps.
• Describe the product honestly, including colour. Describing colour accurately online is worth a read.
• Make your return policy easy to find and fair. See writing a return policy for a small store.
• Use a clear name on payments so customers recognise the charge.

Never treat a refund as a defeat. A prompt refund usually costs less than a dispute.

On Varchas

Online payments run through Cashfree, and the admin has a flow for full refunds, covered in processing a full refund via Cashfree. Disputes themselves are handled by your payment provider, so for how they work, fees and deadlines, read their current guidance or contact them.

Next step

Choose one habit from the list above and start it this week. Evidence kept now is worth far more than evidence reconstructed later.