When a shopper cancels the purchase of a product or service, after they have paid. When the merchant makes the refund, the funds are sent back from the acquirer to the issuer. If an authorised payment hasn't been captured yet, a merchant can cancel the payment; in other cases a refund is possible.

If a merchant refuses to make a refund, a shopper can ask their issuer to make a chargeback. In some cases, a merchant is allowed to dispute a chargeback.

Refunds are also referred to as a modification, since they modify the state of an authorised payment request.