Refund Definition:

A refund transfers funds from your merchant account back to the cardholder's bank account. Refunds are always associated with a transaction that has been authorized and settled, meaning the funds have already been transferred from the customer to the merchant account.

Refund by Transaction:
Refund by transaction shares the same authorization code between the original authorization and refund.

NOTE: A refund by transaction can only be refunded back to the card used for the original purchase.

- Refunded transactions go through the typical settlement process, meaning as soon as the refund settles, the funds are sent back to the cardholder's bank account. Though the cardholder's bank may take a few days to deposit the funds back to the cardholder.
- Refunds against a transaction appear in Reporting app under Payments > Refunds.

Manual (Naked) Refund:
Manual or naked refunds are not linked to any previous transactions (or authorizations). When a manual refund is performed, a new authorization is created and then settles as a refund/credit for the cardholder.
- Manual refunds may be created for a number of reasons (i.e. original card no longer valid, courtesy refund for your customers, customer wants to refund amount back to debit card instead of refunding cash etc.).
- Manual refunds will appear in the Reporting app under Payments > Manual Refunds.

Merits of Refund by Transaction:
You can see the original sale and refund in Transactions app. When printing a receipt, both the original payment and refund appear.