One day you open your inbox and see an email: “Hi, I returned the item last week, when will I receive my refund?”. You check your payment dashboard, the refund was already processed 3 days ago. But on the customer’s side, nothing has arrived. Now, maybe the customer support team is involved, the client is frustrated. You worry about a negative review or even worse, a chargeback!

This is the reality many merchants face, refunds look simple on the surface, but behind the scenes they affect cash flow, risk exposure, customer trust, and even your relationship with payment providers.

Completing a transaction is only half the battle won. How to efficiently and securely manage payment and refund processes is the key factor that determines whether merchants can prevail in competition.

This article will delve into the core challenges modern merchants face when customers ask for a refund after a successful transaction, and explains how refunds actually work for online and in-store purchases. We will also highlight how Silkpay transforms complex financial processes into growth drivers for merchants through our various payment solutions and automated backend system.

Are refunds really a loss to merchant’s revenue?

Before we begin, I need to clarify a point that is easily misunderstood.

Most businesses react defensively when a customer asks for a refund, because they expect administrative burdens, lost revenue, and operational friction. This instinctive reaction comes at a high cost.

However, the data tells a different story. Research from Narvar (2023) shows that 92% of consumers buy again after they receive a fast refund.

Companies that complete refunds within 24 hours see a 3.2 times increase in customer retention over 90 days. The average value of future orders grows by 22%. These businesses far outperform competitors that take several days for each request.

On the other hand, 78% of consumers leave a brand forever if they experience a difficult refund process. Yet more than half of small and medium enterprises in Europe still handle refunds manually through bank transfers or separate platforms. Each transaction requires an extra 15 to 30 minutes of labor. This creates a delay of more than 3 business days for the customer (EuroCommerce, 2025).

This operational friction is what erodes customer lifetime value, not the refund itself. A refund is not a loss of revenue. It is a lever for customer retention.

Merchants who win market share treat refunds as a high impact touchpoint that they must optimize. They do not view them as a failure that they should avoid at all costs. In today's experience economy, the refund process determines whether a customer returns.

Complicated refund is slow, costly, and error-prone

Many merchants still rely on some complicated refund workflows, especially across POS systems, PSP dashboards, and accounting tools.

Typical issues include:

Staff manually entering so much data such as customer names, amounts, or references
Copy-pasting transaction IDs across systems
Processing refunds outside of business hours

Most importantly, we should realize that what looks like a €20 refund can easily cost more in staff time than the product margin itself. Each extra step increases processing time, human error risk, and customer support dependency. If a store employee makes an error during the refund process, it will cause funds being tied up in the bank.

Silkpay’s refund process has been simplified for merchants for this reason. No need to enter too many details, merchants can simply input the refund amount and type their merchant account PIN code, and it's ready to go. Refunds at Silkpay can be made from the POS terminal, Silkpay app or Silkpay merchant dashboard.

Lack of flexible tools for unexpected situations

Standard payment terminals are often rigid during the refund process. They typically only support a binary approach: full refunds or no refunds at all. This becomes problematic when a customer wants to return a single item from a whole order for example. In these cases, the system fails to return funds to the original payment method.

To satisfy an insistent customer, merchants are often left with no choice but to look for workarounds which create operational disorder, or just face criticism and bad reviews because they couldn’t issue a refund.

Reconciliation difficulties:

Manual offline operations prevent the payment records in your system from matching the actual cash flow in your bank account. This data mismatch increases the administrative burden for financial audits. It also exposes the business to statistical risks such as bad debts or duplicate refunds.

Lack of transparency:

The system cannot sync refund status with the customer in real time. Consequently, customers receive no notifications and cannot track their refund online. This "information vacuum" forces customers to contact support repeatedly. Over time, this erodes the professional reputation and reliability of your brand.

Silkpay’s refund process

With Silkpay, you can process refunds in seconds via your dashboard from the POS terminal, Silkpay app or desktop/mobile account.

Option A: Refund via backoffice or Silkpay app

Select the concerned transaction from the transaction list.
Click “Ask to refund” in the top-right corner.
Enter the refund amount (supports full or partial refunds).
Enter your account’s PIN and confirm.

Option B: Direct refund via PAX A920Pro POS terminal

Locate the corresponding transaction on the terminal.
Tap the “Refund” button at the bottom.
Enter the amount and your account’s PIN, then confirm.

Funds are returned via the original payment method without intervention from external banks. Fast, traceable, and highly secure.

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Core benefits of the Silkpay solution

Real-time confirmation to prevent lost orders:

Merchants verify transactions instantly through Silkpay’s real-time confirmation system. This feature is vital for flash sales or high-volume trade. It eliminates uncertainty about payment status and prevents order loss from system delays. As a result, your sales process becomes more fluid and productive.

Instant cross-border refunds:

Instant refunds serve as a primary advantage for Silkpay users. Funds return directly to the customer’s Alipay or WeChat Pay wallet when a refund occurs.

Standard cross-border refunds often take a long time due to currency exchange and intermediary bank processes. But Silkpay digitizes this workflow so Asian tourists confirm their balance before they depart. This efficiency builds trust and lowers administrative communication costs.

Global visibility and financial transparency:

You monitor all transactions and refund statuses through a centralized dashboard. Each payment and refund links automatically to the original order. This system simplifies cash flow management and minimizes financial risks from human error. Every cent is clear and traceable.

Conclusion

In the current experience economy, a refund is not the end of revenue, it is an extension of the customer relationship. Successful businesses do not view them as losses to avoid. Instead, they use refunds as a strategic lever to boost customer loyalty.

Data proves that a fast and seamless refund experience increases customer retention and future order value. Yet many merchants remain stuck in old manual processes. These methods consume high labor costs and erode brand reputation.

You must abandon a defensive response to refund requests. The PAX A920Pro terminal and the Silkpay automated backend work together perfectly. You no longer face anxiety over complex tasks like partial refunds. We offer more than a payment tool. We create a complete ecosystem that transforms financial hurdles into growth drivers for your business.

About the author: Silkpay

Based in Paris, Silkpay provides omnichannel and secure payment solutions to help physical stores and e-commerce in Europe and the Americas accept more than 30 of the world's most popular payment methods: Visa, Mastercard, CB, UnionPay, Alipay+, WeChat Pay as well as Asia-Pacific’s major e-wallets.

Silkpay is a winner of the LVMH Innovation Award. The company was also selected as a finalist for the "Money 20/20" Best Startup and in the "MPE Berlin” Startup Awards. Silkpay also won the "Best Fintech" awards from Capgemini and BPCE.

Silkpay helps merchants deliver the smoothest payment experience to their customers. We are a talented and international team driven by a single goal: to improve the customer experience and make payments simple and secure.