India’s e-commerce market has seen prodigious growth in recent years and entirely transformed the way business is done in the country. Rising internet penetration, higher disposable income, and the availability of just about anything at the click of a button have changed the shopping game for merchants and consumers alike.
At the centre of this e-commerce evolution stands the customer, and every online store today strives to ensure a seamless experience for the buyer. From fastest deliveries to smoothest checkouts and even the best of deals, online transactions are indeed a breeze. However, there is one domain that lags this agility and often hampers the customer experience – the process of online refunds.
The biggest concern during online refunds is the time that they take apart from the lack of clarity on the process. Customers have to wait for updates or follow-up with the buyer for the status of their payment.
A need for a refund usually emerges in two main scenarios – an unsuccessful transaction even when the money is deducted, and a refund request raised by the customer after payment and delivery of goods.
How online refunds are done: Issues and resolutions
The involvement of multiple parties during the payment as well as the refund process makes it complicated and challenging. Here’s a look at the above-mentioned refund cases in detail with their set of issues and resolutions.
Online transactions usually involve four primary stakeholders:
- The customer who initiates the payment
- The merchant who receives the payment
- Issuing bank from where the money is debited
- Acquiring bank to which the money is credited
The merchants use a payment gateway to fulfill the transaction between the two parties. A payment gateway acts as the link between the bank that initiates the payment and the one that receives the amount. During the process, any barrier at any step can lead to a failed transaction. In case the money has already been debited from the customer’s account, a refund is subsequently processed.
Refunds due to unsuccessful transactions: There are multiple reasons for failed payments including an unstable internet while the transaction is being carried out or the cancellation of an ongoing payment. Another notable instance is when banks fail to update the payment status and as a result, the payment gateway is unable to communicate it to the buyer and seller.
When an online refund process is initiated due to a failed or a canceled transaction on the merchant’s or the customer’s part, the request needs to be processed across the network. First, the payment gateway receives the refund request. The gateway then passes this on to their banking partner via APIs.
The banking partner must then communicate to the bank through which the customer has initiated the transaction. Once communicated and accepted by all parties, the refund is filed and processed. Only after all these steps, does the amount reflect in the account.
One reason online refunds consume time is that not all processes in the banking system are completely automated. Sometimes, they have to be manually approved. Also, since the process involves at least three parties, there are multiple layers of communication between the entities. Additionally, there are failures in the system that suspend the refund process until it is initiated all over again.
Refunds raised post-delivery of goods: With consumers making instant purchasing decisions, most industries are seeing a surge in their business, also leading to an increase in the volume of products returned. Again, reasons for initiating a return and refund are myriad from having received a defective item to not being happy with the product and purchase.
In such a case the consumer raises a return request that needs approval from the business. Once accepted and initiated, the request is processed through the payment gateway and the above-mentioned steps are followed again to refund the amount.
How Paytm Instant Refunds speed up the process
In today’s customer-centric market space, a business needs to focus equally on the product as well as its processes. When it comes to online refunds, it is important for businesses to undo the long, opaque, and time-consuming processes.
Merchants who choose Paytm as their payment gateway can now issue refunds to their customers within minutes. Instant Refunds are available to all businesses that have integrated online or in-app payments with Paytm for their business.
Paytm Wallet and Paytm Postpaid are already equipped with Instant Refund capabilities. Customers need not wait to receive refunds in their accounts. The new Instant Refunds feature has also extended this instant money option for transactions made via debit cards, net banking, and UPI.
Features of Paytm Instant Refunds:
- Allows both customers and merchants to initiate a refund request
- Supports large payments
- Provides 100% visibility on online refunds on the dashboard as well as APIs
- Reduces operational costs for merchants
- Does not levy any additional charge for the transaction on the customer or the merchant
How Paytm Instant Refunds work
Paytm allows merchants to offer instant online refunds to their customers using IMPS/UPI rails. For transactions that have been made using debit cards, net banking, UPI, or even credit cards, refunds are credited within a minute or two of initiation. Refunds can be initiated by the customer or the merchant.
The Paytm Instant Refunds process functions as follows:
- The online refund request is initiated by the customer or merchant.
- If the transaction is via Paytm Wallet or Paytm Postpaid, the refund is invariably instant. For other modes, Paytm checks their eligibility.
- If the payment method is eligible, the user is given an option to input bank account details or choose a pre-saved account.
- Paytm then validates the bank account and returns an asset token for reference.
- Paytm’s refund API then activates refunds using this token and the amount is credited to the customer’s account.
- Paytm posts the complete information to the merchant’s callback URL for easy tracking via Success Refund Webhook or Refund Status API.
In conclusion
With customers making informed decisions and businesses offering better clarity on their products online, returns have seen a visible decline. Nevertheless, refunds will continue to remain an inevitable part of the process and hence merchants need to be equipped with the best solutions available.
Paytm Payment Gateway ensures a seamless and quick refund experience for the customers and minimises any issues during the process. Paytm Instant Refunds are helping hundreds of merchants create a better customer experience for their buyers with clarity, transparency and speed on the online refund process.
