How to refund a paid invoice, in full or in part

Refunding a paid invoice is two separate things that happen in order. First you issue a credit note for the amount that is no longer owed — that is the accounting record. Then you return the money, normally to the card or account it came from. The invoice itself stays exactly as it was issued.

Treating these as one action is the most common way a refund goes wrong: the money moves but the books do not, or the credit note is issued twice and the customer is refunded twice.

Why refund to the original payment method?

Three reasons, and they compound:

It is usually required. Card scheme rules generally require refunds to go back to the card used. Refunding a card payment by bank transfer is, from the scheme's point of view, a payout to an unverified destination.

It closes the chargeback window. A refund to the original card is visible to the issuer and linked to the original transaction. A bank transfer is not — so the customer can still raise a chargeback on the card payment, and you can end up paying twice.

It is a well-known money-laundering pattern. Paying by card and requesting a refund to a different destination is a standard layering technique. Gateways monitor for it, and doing it routinely will attract attention you do not want.

Full refund or partial?

A full refund returns the entire invoice amount and is backed by a full credit note. Use it when the invoice should not have been issued at all.

A partial refund returns some of it. This is far more common — a returned item, a disputed line, a goodwill adjustment — and it is where the tax arithmetic matters. The tax on a partial refund has to be back-calculated from the refunded amount at the rate the original line used. Recalculating it from scratch, or applying a blended rate across lines at different rates, produces a figure that is close but wrong, and it will not reconcile.

Can you refund more than the customer paid?

No, and your gateway will refuse. A refund is bounded by the original transaction. If you genuinely owe a customer more than they paid on one invoice — for example a goodwill payment on top of a return — that is a separate transaction, not a refund, and it needs different paperwork.

What is the difference between a refund, a void and a chargeback?

Void cancels an authorisation before it settles. The money never leaves the customer's account and usually no record appears on their statement. Only possible in the window before capture — often the same day.

Refund returns money that has already settled. Two entries appear on the customer's statement: the original charge and the return. It typically takes 3–10 working days to show, which is worth telling the customer up front, because otherwise they will ask.

Chargeback is the customer going to their bank instead of to you. The money is pulled back, you usually pay a fee whether or not you win, and your chargeback ratio matters to your acquirer. A prompt refund is always cheaper than a chargeback.

How long does a refund take to appear?

Typically 3–10 working days for cards, though the money leaves your merchant account immediately. The delay is on the issuer's side and you cannot speed it up.

Say this when you confirm the refund. The gap between "we have refunded you" and the money appearing is the single largest source of follow-up emails about refunds.

What if the original payment method is gone?

An expired card is usually fine: issuers generally route a refund to the replacement card on the same account. A closed account is not — the refund will fail, and you will need to arrange a transfer, document why the original route was unavailable, and keep that documentation.

How this works here

You refund from the invoice itself, choosing full or partial. A credit note is issued for the amount, with tax back-calculated per line at the original rate, and the refund goes back against the original payment in the same step. The customer sees both the credit note and the refund in their own portal, which removes most of the "has it gone through?" traffic.

Frequently asked questions

How do I refund an invoice that has already been paid? Issue a credit note for the amount no longer owed, then refund the money to the original payment method. Do not edit or delete the original invoice.

Can I refund part of an invoice? Yes. Issue a partial credit note for the affected lines and refund that amount. The tax must be back-calculated from the credited amount at the rate the original line used.

How long does a card refund take to appear? Usually 3–10 working days. The money leaves your merchant account immediately, but the delay in showing on the customer's statement is controlled by their card issuer.

Can I refund to a different card or bank account? Generally no. Card scheme rules require refunds to return to the original card, it is what closes the chargeback window, and refunding elsewhere is a recognised money-laundering pattern that gateways monitor for.

What is the difference between voiding and refunding? Voiding cancels an authorisation before it settles, so no money ever moves and usually nothing appears on the customer's statement. Refunding returns money that has already settled, and shows as a second entry.