You paid by credit or debit card, the merchant later agreed to return the money, but the refund has not appeared yet. First identify whether this is actually a merchant refund, a failed payment or an unauthorised transaction — the process is different for each.
Which situation applies to you?
Merchant says the refund has been issued
The original payment was successful and the merchant later processed a refund. This page will help you check and follow up on that refund.
The original payment itself failed
If the merchant did not successfully receive the payment but your account or card was debited, this may be a failed transaction requiring reversal, rather than a merchant refund.
Order cancelled, but merchant has not issued the refund
First follow up with the merchant. Ask whether the refund has actually been processed and obtain the refund date, amount and reference details where available.
You did not make or authorise the transaction
Do not treat this simply as a refund problem. Report the unauthorised transaction to your bank or card issuer immediately.
Merchant says the refund was issued — what should you do?
Confirm the refund with the merchant
Ask when the refund was processed, the amount refunded and whether a refund or transaction reference number is available.
Check the correct card or account
Check the card or bank account through which the original payment was made. A refund may appear as a separate credit entry rather than by changing the original transaction.
Check your latest statement or transactions
For a credit card, check recent credits as well as the amount due and available credit. For a debit card, check the linked bank account for the refund credit.
Keep the refund proof
Preserve the merchant’s refund confirmation, refund date, amount, reference number and relevant messages or emails. These will help if you need to raise a complaint with the card issuer.
Do not rely only on the merchant’s message
A message saying “refund initiated” or “refund processed” does not by itself show that the amount has already reached your card or bank account. Check the actual credit and keep the merchant’s refund reference for follow-up.
Refund or reversal — what is the difference?
They are not the same thing
Failed-transaction reversal: the payment did not successfully complete, although your account or card was debited. The applicable failed-transaction reversal framework may apply.
Merchant refund: the original payment was successful and the merchant later returned, or agreed to return, the money — for example after cancellation, return of goods or another merchant resolution.
Therefore, the RBI T+5 working-day failed-transaction rule should not automatically be applied to every merchant refund.
How is a refund adjusted on a credit card?
What happens to the refund depends partly on whether you have already paid the corresponding credit-card dues.
You have not yet paid the corresponding amount
If the refund is credited before the payment due date and you have not yet paid the corresponding amount, the refund is adjusted against the amount payable on the card.
You have already paid the corresponding amount
The refund can create a credit balance on your card account. RBI has specific rules on how such refund credits are to be handled by the card issuer.
If you have not yet paid the corresponding card dues
RBI position
If a refund, failed transaction or reversed transaction is credited before the payment due date and you have not already paid the corresponding amount, the credit must be immediately adjusted against the payment due.
The cardholder must also be notified of the adjustment.
Example
Your credit-card bill shows a total amount due of ₹30,000.
Before the payment due date, a ₹8,000 refund for a cancelled purchase is credited to the card and you have not yet paid that corresponding amount.
The refund is adjusted against the payment due. In this simple example, the remaining amount payable becomes ₹22,000.
If you have already paid the corresponding card dues
RBI position
Where the corresponding payment has already been made, RBI prescribes a cut-off for adjustment of the resulting credit amount against the credit limit.
The cut-off is: 1% of the credit limit or ₹5,000, whichever is lower.
For a credit amount beyond this cut-off, the card issuer must seek your explicit consent before adjusting it against the credit limit.
The issuer is required to seek this consent through email or SMS within seven days of the credit transaction.
If you do not give consent or no response is received, the credit amount is to be returned to your bank account.
Example — understanding the cut-off
Suppose your credit limit is ₹2,00,000.
1% of the credit limit is ₹2,000. Since ₹2,000 is lower than ₹5,000, the applicable cut-off in this example is ₹2,000.
A refund credit beyond that cut-off, where the corresponding dues have already been paid, is subject to the RBI consent mechanism described above.
Do not read the cut-off as a refund charge or deduction
The 1% / ₹5,000 figure is a regulatory cut-off for how certain credit balances are handled. It does not mean that this amount can be deducted from your refund as a fee.
Can you ask for the credit balance to be sent to your bank account?
Yes — you can request it
If a refund credit is outstanding in your credit-card account after you have already paid the corresponding transaction, you can ask the card issuer to transfer that credit amount to your bank account.
RBI requires the card issuer to make the transfer within three working days of receiving your request.
This right applies irrespective of the 1% / ₹5,000 cut-off.
Merchant says the refund was processed, but you have not received it
Before raising a dispute, collect enough information to show that the merchant actually processed the refund.
Ask for refund confirmation
Ask the merchant for written confirmation that the refund has been processed, including the refund date and amount.
Ask for the refund reference
Obtain the refund or transaction reference number, ARN or other trace/reference details where the merchant can provide them.
Check the card or account again
Look for a separate credit entry. On a credit card, also check whether the amount due or available credit has changed.
Contact the card issuer
If the refund is still missing, give the bank or card issuer the merchant’s refund confirmation and reference details and ask them to trace the credit.
If the merchant has not actually processed the refund
The bank cannot credit a merchant refund merely because the merchant has agreed to issue one. If the merchant has not yet processed the refund, first pursue the matter with the merchant. If there is a dispute over the underlying purchase, cancellation, goods or services, the appropriate card-dispute process may be relevant.
What should you give the bank when you complain?
Give enough information to trace the refund
Raise the complaint through an official channel of your bank or card issuer and keep the complaint number.
Where available, provide:
- date and amount of the original card transaction;
- merchant name;
- date and amount of the refund;
- merchant’s refund confirmation;
- refund reference, ARN or other trace/reference number;
- relevant statement or transaction screenshot; and
- your earlier correspondence with the merchant.
If the refund complaint remains unresolved
Card issuer / bank
First lodge a formal complaint with the bank or card issuer and preserve the complaint acknowledgement or reference number.
Bank’s escalation channel
If the response is unsatisfactory or the issue remains unresolved, escalate through the bank’s official grievance-redress mechanism.
RBI Ombudsman
Where the complaint remains eligible for further escalation, you may approach the RBI Ombudsman under the applicable RBI grievance redress framework.
Related help
Official RBI reference
RBI — Credit Card & Debit Card Directions
RBI’s card directions contain the regulatory provisions governing adjustment and transfer of refund, failed and reversed transaction credits in credit-card accounts.
View the RBI Master Direction →
Last verified by BankBodh: September 2026
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