Refunds and chargebacks are some of the more difficult aspects of processing credit card transactions for merchants. To make matters more complicated, different companies have different ways of handling refunds.

As a business owner, you want your credit card processing fees to be refunded if a customer makes a return. Otherwise, you have to eat the cost. Unfortunately, not all companies work this way—it depends on the individual refund policy of the processor you use. Here is a general overview for different credit card processing companies of what happens to your fee when a customer gets a refund on their purchase.

PayPal

PayPal is one credit card processing company that doesn’t refund fees if a customer makes a return. As long as the customer uses a credit or debit card as their payment method, the fees are final. Once the fees are deducted from your account, they won’t be returned even if a customer gets their money back. This was a controversial decision, but despite many requests to revert to a more merchant-friendly policy, it’s a change that PayPal stuck with.

Stripe

When Stripe first started, they were like PayPal: they kept the credit card fee even if a customer got a refund for their purchase. In late 2012, however, they changed their policy. They now refund processing fees to business owners once a refund or chargeback has been fully processed. Soon after the customer’s refund completes, you’ll get a credit to your account balance or a refund check of your own.

Square

Like Stripe, Square is a payment gateway that absorbs the card processing interchange fee if a customer requests a cancellation and puts a refund through. That means that you, the business owner, aren’t left holding the bag and don’t have to worry about paying fees for transactions that are reversed.

Amazon Pay

For Amazon Pay, merchants will get back most transaction fees for customer refunds, but not all of them. Your refund check is likely to be a partial refund of fees, but may not include them all. The basic breakdown for Amazon Pay goes like this:

Amazon processes refunds for certain interchange rates, such as the domestic credit card processing fee, to business owners when a customer gets their own refund. As a merchant, you will also be refunded the cross-border processing fee. The authorization fee and disputed chargeback fees, however, are non-refundable. The disputed chargeback fee is $20, and the authorization fee is $0.30.

Final Thoughts

How credit card processing companies handle fees on refunds all depends on which processor you use. Some companies have more generous refund polices than others. The best way to avoid having to absorb these fees is to take every step you can to minimize the incidence of refunds in the first place.

Some refunds are going to be inevitable. But by reducing them to a bare minimum, you can save yourself the hassle of having to worry about what fees will and won’t be refunded. The best way to do this is with a crystal-clear cancellation policy as well as clear return policies.

As for the timeline for getting your fees back, the number of business days you’ll have to wait to see your funds refunded depends on which company you use.