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Dec 21, 2020

Introduction to Cryptocurrency Payment Refunds with COINQVEST

Unlike traditional online payment methods (such as credit card charges or PayPal), cryptocurrency payments are irreversible by design. The merchant has final authority over refunds and decides which transactions are eligible to be rolled back. This blog post explains how we implemented refund handling on the COINQVEST platform.

Blockchain transactions are inherently immutable and irreversible. It is not possible for customers to undo payments or invoke chargebacks because there aren't any middlemen supervising the flow of funds. Once a blockchain payment is settled it will stay settled unless the recipient of funds decides otherwise. While this is great news for merchants because it puts them in control, there are many situations in which a refund of received funds is desirable. This blog post illustrates how the COINQVEST platform supports merchants and customers in providing a clean refund experience.

There are currently three types of refund interfaces in COINQVEST.

  1. Refunds for Completed Checkouts
  2. Refunds for Underpaid Checkouts
  3. Refunds for Overpaid Blockchain Transactions

Refunds for Completed Checkouts

The first form of refunds are reversals of successfully completed checkouts. This is the most common situation. Imagine a customer buying a t-shirt from your shop and realizing that it doesn't fit and wanting to return it. In that type of situation a merchant can decide that it is appropriate to return the funds to the customer. The checkout details page in a merchant's dashboard has a button, which opens a UI interface for issuing a refund. COINQVEST automatically converts funds back into the customer's payment currency (e.g. BTC) if it is different from the currency used for settlement by the merchant (e.g. EUR).

Refund Completed Checkout

Once the refund has been confirmed, the merchant's account is debited and funds are returned to the customer's blockchain account.

Refunds for Underpaid Checkouts

The second form of refunds are reversals of checkouts that were underpaid by the customer and did not successfully complete. We discuss this type of situation in our blog post about payment exceptions. Underpaid checkouts are listed as "unresolved" in the merchant's dashboard and payment history and can refunded directly as part of the possible mitigation options for this type of exception.

Refund Underpaid Checkout

Once a refund for an underpaid checkout has been confirmed, the funds are returned to the customer's blockchain account and the associated payment exception is marked as resolved in the merchant's COINQVEST account.

Refunds for Overpaid Blockchain Transactions

The third form of refunds are reversals of overpaid blockchain transactions. We frequently observe customers paying twice for the same charge, thus overpaying it. This usually happens on slow blockchains like Bitcoin or Ethereum when customers send the transaction but it takes a long time for it to be confirmed. Customers are sometimes under the impression that they did something wrong and send an an additional payment transaction. When both the transactions are eventually confirmed, our system ends up with two full payments for the exact same charge.

Overpaid TX Exception

The solution for this type of situation is to refund one of the payments and keep the other one and we provide a UI to do this conveniently.

Refund Overpaid Tx

Once an overpaid blockchain transaction has been refunded, the associated payment exception is marked as resolved in the merchant's checkout details and funds are returned to the customer's blockchain account.

Overpaid TX Resolved

We Love to Help!

If you have ideas or requests on how to improve our refund handling, please feel free to contact us. We're always looking for feedback.

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Marcin Olszowy COINQVEST Co-Founder