{"id":27001,"date":"2026-06-08T14:43:04","date_gmt":"2026-06-08T09:13:04","guid":{"rendered":"https:\/\/razorpay.com\/blog\/?p=27001"},"modified":"2026-06-08T14:43:04","modified_gmt":"2026-06-08T09:13:04","slug":"do-you-get-mdr-back-on-refunds","status":"publish","type":"post","link":"https:\/\/razorpay.com\/blog\/do-you-get-mdr-back-on-refunds\/","title":{"rendered":"Do You Get Your MDR Back When You Refund a Customer? Payment Gateway Refund Fee Policies Explained"},"content":{"rendered":"<p><span style=\"font-size: 19px; color: rgba(0, 0, 0, 0.74); font-weight: 400;\">When a merchant refunds a customer, the customer typically receives the full transaction amount back, but the Merchant Discount Rate (MDR) charged on the original payment is generally not returned to the merchant. The deeper question is not whether MDR is refundable &#8211; it is how refund losses fit into the Total Cost of Ownership (TCO) of a payment gateway. A lower headline TDR can quietly cost more than a higher one once annual maintenance charges, setup fees, refund fee retention, and payment success rates are factored in. This article documents exact refund cost calculations, payment gateway policy structures in India, and the TCO framework merchants should use to evaluate refund economics.<\/span><\/p>\n<div style=\"border-left: 4px solid #007BFF; background: #f0f8ff; padding: 25px; margin: 30px 0; border-radius: 8px; font-family: Arial, sans-serif; text-align: left;\">\n<h3 style=\"margin-top: 0; color: #007bff; font-size: 22px;\">Key Takeaways<\/h3>\n<ul style=\"margin: 15px 0; padding-left: 20px; color: #333; line-height: 1.6;\">\n<li>MDR is non-refundable across Indian payment gateways once a transaction is successfully captured, regardless of whether the merchant later issues a full or partial refund.<\/li>\n<li>The customer receives the full refund amount, but the merchant absorbs the MDR plus 18% GST on that fee as a permanent cost.<\/li>\n<li>On a refunded Rs. 5,000 transaction at 2% MDR, the merchant loses Rs. 118 even though the customer is made whole.<\/li>\n<li>Voiding an authorization before capture typically avoids MDR entirely.<\/li>\n<li>Total Cost of Ownership (MDR + GST + AMC + setup fees + refund losses + chargeback costs + revenue lost to failed payments) is the correct evaluation framework, not the headline TDR percentage.<\/li>\n<li>Payment gateways charging Rs. 4,999 annually in AMC add Rs. 416 per month to operating costs, erasing a 0.25 percentage point TDR advantage at Rs. 2 lakh monthly GMV.<\/li>\n<li>UPI zero MDR does not mean zero refund cost &#8211; platform fees and PPI-based interchange above Rs. 2,000 still apply in many cases.<\/li>\n<\/ul>\n<\/div>\n<h2>Quick Answer: Does MDR Come Back After a Refund?<\/h2>\n<p>The short answer: no, MDR is not returned to the merchant when a customer is refunded on a successfully captured transaction. This holds true across every major Indian payment gateway operating under the aggregator model. The MDR is treated as a service fee earned the moment the payment is authorised, captured, and settled. Reversing the customer-facing transaction does not reverse the service already rendered.<\/p>\n<p>The answer changes by transaction state, not by customer outcome. A failed payment never incurs MDR. An authorisation voided before capture similarly avoids MDR in most cases. A captured payment that is later refunded locks in the MDR as a permanent merchant cost. Chargebacks are the most expensive scenario because they combine the MDR loss with additional dispute fees.<\/p>\n<table>\n<thead>\n<tr>\n<th>Transaction event<\/th>\n<th>Customer money back?<\/th>\n<th>Merchant MDR back?<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Failed payment<\/td>\n<td>No payment completed<\/td>\n<td>No MDR charged<\/td>\n<\/tr>\n<tr>\n<td>Void before capture<\/td>\n<td>No final charge<\/td>\n<td>Usually no MDR charged<\/td>\n<\/tr>\n<tr>\n<td>Full refund after capture<\/td>\n<td>Yes, full amount<\/td>\n<td>No<\/td>\n<\/tr>\n<tr>\n<td>Partial refund after capture<\/td>\n<td>Yes, partial amount<\/td>\n<td>No<\/td>\n<\/tr>\n<tr>\n<td>Chargeback (customer wins)<\/td>\n<td>Yes, full amount<\/td>\n<td>No, plus dispute fee<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p>The practical implication: merchants must treat the MDR plus 18% GST as a sunk cost on every refunded order and build that loss into unit economics, return policies, and pricing strategy.<\/p>\n<h2>What MDR Actually Pays For<\/h2>\n<p>The Merchant Discount Rate is a bundled fee that compensates multiple parties in the payment ecosystem for a single transaction. It is not a single charge collected by the payment gateway alone.<\/p>\n<p>The first component is the interchange fee, paid to the card-issuing bank. This compensates the issuer for extending credit, assuming fraud risk, and operating the cardholder account. The second component is the network assessment fee, paid to Visa, Mastercard, RuPay, or American Express for routing the transaction. The third component is the processor or acquirer markup, which covers settlement, reconciliation, fraud screening, dispute handling, and merchant support.<\/p>\n<p>In the Indian aggregator model, these components are bundled into a single MDR or platform fee. The term Transaction Discount Rate (TDR) is often used interchangeably with MDR. Layered on top is 18% GST, which applies to the payment processing fee itself.<\/p>\n<p>Once a transaction is successfully captured, the issuing bank has authorised funds, the network has routed the transaction, and the processor has settled the payment. A subsequent refund instructs the same parties to move funds back, but it does not undo the original service work. This is why MDR is non-refundable.<\/p>\n<div style=\"background: #f9fbff; border-left: 4px solid #007BFF; padding: 22px 25px; margin: 30px 0; border-radius: 8px; font-family: Arial, sans-serif; color: #333; line-height: 1.6;\">\n<h3 style=\"margin: 0 0 12px 0; color: #007bff; font-size: 20px; display: flex; align-items: center;\">Did You Know?<\/h3>\n<p style=\"margin: 0; font-size: 16px;\">On a Rs. 5,000 refunded order at 2% MDR plus 18% GST, the merchant loses Rs. 118 &#8211; even though the customer receives the full Rs. 5,000 back. At a 10% refund rate on Rs. 10 lakh monthly GMV, this equates to Rs. 2,360 in unrecoverable processing fees every month.<\/p>\n<\/div>\n<h2>Refund Scenarios Explained: Failed, Voided, Refunded, and Charged Back<\/h2>\n<p>The single most important distinction in refund economics is the transaction state at the moment of reversal.<\/p>\n<p>A failed transaction is one where the payment never completed successfully. No MDR is charged because no value was transferred. The merchant should verify that no settlement entry was created on the dashboard.<\/p>\n<p>An authorisation hold is a temporary reservation of funds, typically valid for 5 to 7 days. If the merchant voids the authorisation before capture, the transaction is cancelled at the network level and no MDR is incurred in most cases. Merchants in industries with batch capture workflows, such as travel bookings or custom manufacturing, gain a significant economic advantage by delaying capture until fulfilment is confirmed.<\/p>\n<p>A full refund occurs after capture. The customer receives the entire transaction amount back, typically within 5 to 7 business days. The merchant loses the MDR and the GST on that MDR permanently.<\/p>\n<p>A partial refund returns only a portion of the original transaction. The MDR was calculated on the original full transaction amount and is not recalculated. Partial refunds therefore carry a proportionally higher MDR burden on the retained revenue.<\/p>\n<p>A chargeback is initiated by the customer through their issuing bank. Chargebacks combine three costs: the original MDR (already lost), the refunded transaction amount (if the merchant loses the dispute), and a chargeback fee typically ranging from Rs. 200 to Rs. 750 per case. Excessive chargeback rates can trigger payment gateway risk reviews or merchant account termination.<\/p>\n<h2>How Much Does a Refund Really Cost? Exact Examples<\/h2>\n<p>The formula is straightforward:<\/p>\n<p>Refund Cost = (Transaction Amount * MDR%) + 18% GST on the MDR amount.<\/p>\n<table>\n<thead>\n<tr>\n<th>Order value (Rs.)<\/th>\n<th>MDR at 2% (Rs.)<\/th>\n<th>GST at 18% on MDR (Rs.)<\/th>\n<th>Total fee lost on full refund (Rs.)<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>1,000<\/td>\n<td>20.00<\/td>\n<td>3.60<\/td>\n<td>23.60<\/td>\n<\/tr>\n<tr>\n<td>2,000<\/td>\n<td>40.00<\/td>\n<td>7.20<\/td>\n<td>47.20<\/td>\n<\/tr>\n<tr>\n<td>5,000<\/td>\n<td>100.00<\/td>\n<td>18.00<\/td>\n<td>118.00<\/td>\n<\/tr>\n<tr>\n<td>10,000<\/td>\n<td>200.00<\/td>\n<td>36.00<\/td>\n<td>236.00<\/td>\n<\/tr>\n<tr>\n<td>50,000<\/td>\n<td>1,000.00<\/td>\n<td>180.00<\/td>\n<td>1,180.00<\/td>\n<\/tr>\n<tr>\n<td>1,00,000<\/td>\n<td>2,000.00<\/td>\n<td>360.00<\/td>\n<td>2,360.00<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p>Partial refunds introduce a less obvious calculation. Consider a Rs. 5,000 transaction at 2% MDR. The MDR of Rs. 100 plus Rs. 18 GST was charged on the full Rs. 5,000. If the merchant later refunds Rs. 2,000, the merchant retains Rs. 3,000 of the original payment. The MDR remains Rs. 118 in total fees. The effective fee rate on the retained Rs. 3,000 is therefore 3.93%, not 2%.<\/p>\n<p>The compounding effect is material. A merchant processing Rs. 20 lakh in monthly GMV with a 12% refund rate at 2% MDR loses approximately Rs. 5,664 every month in MDR plus GST on refunded orders. Over a year, this is Rs. 67,968 &#8211; a line item that rarely appears as a separate disclosure on settlement reports.<\/p>\n<h2>Payment Gateway Refund Fee Policies in India<\/h2>\n<p>Refund fee policies in India follow a near-uniform pattern at the aggregator level, but the underlying fee structures differ enough to produce meaningfully different TCO outcomes.<\/p>\n<table>\n<thead>\n<tr>\n<th>Pricing component<\/th>\n<th>Common market range<\/th>\n<th>Refund treatment<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Standard domestic platform fee<\/td>\n<td>1.90% to 2.15% plus 18% GST<\/td>\n<td>MDR not refunded<\/td>\n<\/tr>\n<tr>\n<td>Promotional domestic rate<\/td>\n<td>1.6% plus 18% GST<\/td>\n<td>MDR not refunded<\/td>\n<\/tr>\n<tr>\n<td>International cards<\/td>\n<td>2.69% to 3% plus 18% GST<\/td>\n<td>MDR and forex markup not refunded<\/td>\n<\/tr>\n<tr>\n<td>American Express, Diners<\/td>\n<td>2.95% to 3% plus 18% GST<\/td>\n<td>MDR not refunded<\/td>\n<\/tr>\n<tr>\n<td>UPI on RuPay credit card<\/td>\n<td>1.6% to 2% plus 18% GST<\/td>\n<td>MDR not refunded<\/td>\n<\/tr>\n<tr>\n<td>Annual maintenance (AMC)<\/td>\n<td>Rs. 0 to Rs. 4,999 per year<\/td>\n<td>Fixed cost, unaffected by refunds<\/td>\n<\/tr>\n<tr>\n<td>Software upgradation<\/td>\n<td>Rs. 1,200 per year plus GST<\/td>\n<td>Fixed cost<\/td>\n<\/tr>\n<tr>\n<td>Setup fees<\/td>\n<td>Rs. 0 to Rs. 10,000<\/td>\n<td>Fixed cost<\/td>\n<\/tr>\n<tr>\n<td>Fixed per-transaction fee<\/td>\n<td>Rs. 3 per transaction<\/td>\n<td>Charged on success, not returned<\/td>\n<\/tr>\n<tr>\n<td>Instant settlement fee<\/td>\n<td>0.25% to 0.50% per transaction<\/td>\n<td>Not refunded<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p>The variance in fixed costs creates the most important TCO divergence. A payment gateway charging Rs. 4,999 annual AMC adds Rs. 416 to monthly operating costs. A payment gateway charging Rs. 0 in AMC and Rs. 0 in setup fees contributes zero fixed cost.<\/p>\n<p>At Rs. 2 lakh monthly GMV, a payment gateway with zero AMC at 2.15% TDR delivers the same effective cost as one with Rs. 5,000 AMC at 1.95% TDR. Below Rs. 2 lakh GMV, the zero-AMC payment gateway is strictly cheaper.<\/p>\n<p>The Rs. 3 per-transaction flat fee model carries a separate distortion: on a Rs. 100 transaction, a Rs. 3 fixed fee plus 2% MDR equals an effective rate of 5%. Merchants with low average order values should model this carefully.<\/p>\n<h2>UPI Refunds: Why 0% MDR Does Not Always Mean Zero Cost<\/h2>\n<p>The zero-MDR policy on standard bank-to-bank UPI transactions applies to small merchants with annual turnover below Rs. 20 lakh. The policy has driven UPI to dominant status in Indian digital payments, but it has created widespread misunderstanding about the true cost of UPI refunds.<\/p>\n<p>Several scenarios introduce real costs despite the headline zero MDR. First, payments through Prepaid Payment Instruments (PPIs) such as digital wallets attract interchange fees when transaction values exceed Rs. 2,000. The rate varies by merchant category: fuel at 0.5%, telecom and education at 0.7%, supermarkets at 0.9%, and insurance and railways at 1.1%.<\/p>\n<p>Second, UPI on RuPay credit card transactions attract MDR in the 1.6% to 2% range plus 18% GST, because these involve bank-funded credit rather than direct account debits.<\/p>\n<p>Third, payment gateways may charge platform fees on UPI transactions even where the regulatory MDR is zero. Whether these platform fees are reversed on refunds depends on the merchant agreement &#8211; the default treatment is non-refundable, mirroring MDR policy.<\/p>\n<p>The practical takeaway: merchants should not assume any UPI refund is free. The contractual treatment of platform fees and PPI interchange must be confirmed in writing before assuming UPI refund costs are zero.<\/p>\n<h2>MDR Refunds Versus Interchange Credits: The Hidden Difference<\/h2>\n<p>There is a structural nuance that explains why &#8220;MDR is never refunded&#8221; is technically incomplete. Visa and Mastercard rules generally allow for interchange credits to flow back to the acquirer when a transaction is refunded. In direct merchant account models, the acquirer may pass that credit through. In aggregator models, this rarely happens.<\/p>\n<p>The aggregator&#8217;s published pricing is opaque about how much of the fee is interchange versus markup. When a refund triggers an interchange credit at the network level, that credit accrues to the aggregator&#8217;s acquiring bank relationship, not to the merchant. Unless the merchant agreement explicitly requires interchange pass-through, the aggregator retains the credit as part of its margin.<\/p>\n<p>The Indian payment aggregator regulatory framework, governed by the Reserve Bank of India, does not currently mandate interchange pass-through on refunds. The default contractual posture is that all components of the MDR or platform fee are non-refundable.<\/p>\n<p>A short verification process can identify whether any refund credits are being passed through. The finance team should select a refunded transaction of Rs. 5,000 or higher, locate the settlement entry, and check for any positive line items labelled as interchange credit or fee reversal. If none exist, the aggregator is retaining the full fee.<\/p>\n<h2>Total Cost of Ownership: Why MDR Rate Alone Misleads Merchants<\/h2>\n<p>The single most consequential evaluation error merchants make is choosing a payment gateway based on the headline TDR without modelling Total Cost of Ownership.<\/p>\n<p><em><strong>Total Payment Cost = MDR + 18% GST on MDR + Fixed fees (AMC, setup, ASUC) + Refund losses + Chargeback costs + Instant settlement fees + Revenue lost to failed payments<\/strong><\/em><\/p>\n<p>Consider a merchant processing Rs. 2 lakh in monthly GMV with a 10% refund rate.<\/p>\n<table>\n<thead>\n<tr>\n<th>Cost component<\/th>\n<th>Payment Gateway A (1.95% TDR, Rs. 4,999 AMC)<\/th>\n<th>Payment Gateway B (2.15% TDR, Rs. 0 AMC)<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>MDR on Rs. 2L GMV<\/td>\n<td>Rs. 3,900<\/td>\n<td>Rs. 4,300<\/td>\n<\/tr>\n<tr>\n<td>GST at 18% on MDR<\/td>\n<td>Rs. 702<\/td>\n<td>Rs. 774<\/td>\n<\/tr>\n<tr>\n<td>Monthly AMC allocation<\/td>\n<td>Rs. 416<\/td>\n<td>Rs. 0<\/td>\n<\/tr>\n<tr>\n<td>MDR lost on Rs. 20K refunded<\/td>\n<td>Rs. 390<\/td>\n<td>Rs. 430<\/td>\n<\/tr>\n<tr>\n<td>GST lost on refunded MDR<\/td>\n<td>Rs. 70<\/td>\n<td>Rs. 77<\/td>\n<\/tr>\n<tr>\n<td><strong>Total monthly cost<\/strong><\/td>\n<td><strong>Rs. 5,478<\/strong><\/td>\n<td><strong>Rs. 5,581<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p>The break-even sits at approximately Rs. 2.08 lakh monthly GMV &#8211; below this level, the zero-AMC payment gateway is cheaper despite the higher TDR.<\/p>\n<p>Payment success rate is the most underweighted variable. Industry benchmarks suggest D2C brands should target 95% success rates, with the average e-commerce platform achieving approximately 90%. The difference between a payment gateway delivering 93% success versus one delivering 85% on Rs. 1 crore in attempted GMV is Rs. 8 lakh in captured revenue. No headline TDR difference of 0.2 to 0.3 percentage points compensates for this gap.<\/p>\n<h2>How to Reconcile Refunds in Settlement Reports<\/h2>\n<p>Refunds create the most common reconciliation challenge because the original payment and the refund occur in different settlement cycles, sometimes different months.<\/p>\n<p>The first rule is to capture the original payment ID on every refund line item. Without this linkage, refund debits in the April settlement file cannot be traced to March sales.<\/p>\n<p>The second rule is to track refund date and order date separately. The accounting impact applies in the period the refund was processed, not when the original order was placed.<\/p>\n<p>The third rule is to separate the customer refund amount from the MDR loss in financial reporting. The customer refund is a reversal of revenue. The MDR loss is a permanent processing expense.<\/p>\n<p>The fourth rule is to monitor GST on payment processing fees as a distinct line. Whether the merchant can claim input tax credit on this GST depends on the business&#8217;s GST registration status.<\/p>\n<p>The fifth rule is to forecast negative settlement risk during high-refund periods. After major sale events, refund debits can exceed new sales for a short window, producing negative net settlements. This is a timing artefact, not an error.<\/p>\n<div style=\"background: #f9fbff; border-left: 4px solid #007BFF; padding: 22px 25px; margin: 30px 0; border-radius: 8px; font-family: Arial, sans-serif; color: #333; line-height: 1.6;\">\n<h3 style=\"margin: 0 0 12px 0; color: #007bff; font-size: 20px; display: flex; align-items: center;\">Did You Know?<\/h3>\n<p style=\"margin: 0; font-size: 16px;\">Refund debits frequently appear in a different settlement month from the original sale, producing settlement files that show negative net amounts during high-return periods. Finance teams should link every refund to the original payment ID to reconcile properly.<\/p>\n<\/div>\n<h2>Merchant Checklist Before Choosing a Payment Gateway<\/h2>\n<p>Before signing a payment gateway agreement, merchants should obtain written confirmation on the following clauses:<\/p>\n<ul>\n<li>The MDR or TDR percentage by payment method, including domestic cards, international cards, American Express, UPI, net banking, wallets, and EMI. The contract should state whether GST is included or added on top.<\/li>\n<li>The fixed cost schedule: setup fee, annual maintenance charge, software upgradation charge, and any minimum monthly commitment. Specify whether first-year waivers apply.<\/li>\n<li>The refund policy: whether MDR is refunded, whether platform fees are reversed on partial refunds, whether GST is reversed, and any separate refund processing fee.<\/li>\n<li>The chargeback policy: fee per dispute, fixed or variable structure, and the documentation timeline for representment.<\/li>\n<li>The settlement cycle and instant settlement terms, including whether instant settlement fees are refunded on subsequent customer refunds.<\/li>\n<li>The interchange pass-through policy on card refunds, particularly relevant for negotiated enterprise pricing.<\/li>\n<li>The published payment success rate benchmark for the merchant&#8217;s category and average order value.<\/li>\n<li>The reconciliation tooling and report formats, including whether original payment IDs are exposed on refund line items.<\/li>\n<\/ul>\n<h2>Why TCO Favours Razorpay for Most Indian Merchants<\/h2>\n<p>Razorpay&#8217;s pricing structure aligns with the TCO framework outlined above. The platform&#8217;s design eliminates the fixed-cost variables that quietly increase the effective rate.<\/p>\n<table>\n<thead>\n<tr>\n<th>Cost component<\/th>\n<th>Razorpay structure<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Setup fee<\/td>\n<td>Rs. 0<\/td>\n<\/tr>\n<tr>\n<td>Annual maintenance charge<\/td>\n<td>Rs. 0<\/td>\n<\/tr>\n<tr>\n<td>Integration support fee<\/td>\n<td>Rs. 0<\/td>\n<\/tr>\n<tr>\n<td>Standard platform fee<\/td>\n<td>2% plus 18% GST<\/td>\n<\/tr>\n<tr>\n<td>Custom enterprise pricing<\/td>\n<td>Available above Rs. 5 lakh monthly GMV<\/td>\n<\/tr>\n<tr>\n<td>Payment success rate benchmark<\/td>\n<td>93%+*, above the e-commerce average of 90%<\/td>\n<\/tr>\n<tr>\n<td>Instant settlement availability<\/td>\n<td>Yes, with documented fee structure<\/td>\n<\/tr>\n<tr>\n<td>Refund processing<\/td>\n<td>No additional refund processing fee<\/td>\n<\/tr>\n<tr>\n<td>Reconciliation tooling<\/td>\n<td>Original payment ID linkage exposed on refunds<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p>At Rs. 2.08 lakh monthly GMV, the zero AMC eliminates Rs. 416 per month in fixed costs that gateways charging Rs. 4,999 annually impose. Above Rs. 5 lakh monthly GMV, custom pricing becomes negotiable.<\/p>\n<p>The payment success rate differential compounds this advantage. On Rs. 1 crore in attempted monthly GMV, the difference between a 93% success rate and an 85% success rate is Rs. 8 lakh in captured revenue &#8211; outweighing any plausible TDR difference in the Indian market.<\/p>\n<h2>FAQs<\/h2>\n<h3>If I refund a customer on the same day, do I get the MDR back?<\/h3>\n<p>No. Once a payment is successfully captured, the MDR is considered earned regardless of when the refund is issued. Same-day refunds are treated identically to refunds processed weeks or months later.<\/p>\n<h3>Is MDR charged if I cancel an order before capturing the payment?<\/h3>\n<p>No. If you void the authorisation before capture, MDR is typically not charged because no value transfer occurred. Merchants with batch capture workflows should delay capture until fulfilment is confirmed.<\/p>\n<h3>What is the difference between voiding a payment and refunding a payment?<\/h3>\n<p>A void cancels an authorisation before the payment is captured and settled, typically incurring no MDR. A refund reverses a captured and settled transaction, returning funds to the customer while the merchant absorbs the MDR plus GST. Voids are only possible within the authorisation hold window, generally 5 to 7 days.<\/p>\n<h3>If I issue a partial refund, is MDR recalculated only on the amount I keep?<\/h3>\n<p>No. The MDR was charged on the original full transaction amount and is not recalculated. On a Rs. 5,000 transaction with a Rs. 2,000 partial refund, the merchant retains Rs. 3,000 but the full MDR of Rs. 118 remains charged.<\/p>\n<p><em><strong data-start=\"47\" data-end=\"62\">Disclaimer: <\/strong><\/em><em>Payment gateway refund fee policies, MDR reversals, and transaction charge rules may vary by provider, payment method, business category, and contract terms. The information in this article is for general guidance only. Always check with your payment gateway provider or refer to the latest official documentation for the most accurate and up-to-date information.<\/em><\/p>\n<p><em>*Razorpay Success Rates values are indicative and may vary based on your business profile, payment mix, and real-world conditions.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>When a merchant refunds a customer, the customer typically receives the full transaction amount back, but the Merchant Discount Rate (MDR) charged on the original payment is generally not returned to the merchant. The deeper question is not whether MDR is refundable &#8211; it is how refund losses fit into the Total Cost of Ownership<\/p>\n","protected":false},"author":149,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[906],"tags":[],"class_list":{"0":"post-27001","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-payment-gateway"},"_links":{"self":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/27001","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/users\/149"}],"replies":[{"embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/comments?post=27001"}],"version-history":[{"count":1,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/27001\/revisions"}],"predecessor-version":[{"id":27002,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/27001\/revisions\/27002"}],"wp:attachment":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/media?parent=27001"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/categories?post=27001"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/tags?post=27001"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}