After deduction of fees and tax, the payments received from your customers are added to your Merchant Balance or Current Balance. According to your settlement cycle, this accumulated amount is settled in your bank account.
The current balance is used to process refunds to your customer, settlements to your linked accounts and chargebacks.
It is important for you to maintain a sufficient current balance. You can add funds to your current balance account from your Dashboard to ensure you have sufficient current balance for your business needs.
We do not charge any fee to process refunds. However, the fees and tax charged for processing the original transaction are not refunded to you when you process a customer refund. This amount is deducted from your current balance when you process your refund.
If any chargeback is applicable for you and you do not have a sufficient balance in your current balance, the current balance will become negative.
Click Add Funds in the Current Balance section and follow the on-screen instructions.
When you add funds to your current balance, fees and tax are deducted and the remaining amount is added to your current balance. The fees and tax charged are the same as what is charged on payments received from customers.
For example, according to your pricing plan for a ₹1,000 payment, the fees and tax is ₹5. When you add ₹1,000 to your current balance, ₹5 (fees and tax) is deducted, and ₹995 is added to your current balance.
Reserve Balance allows you to process refunds or settlements to linked accounts even if you do not have a sufficient current balance. The amount you add as the reserve balance becomes the maximum negative limit for your account. Razorpay does not deduct funds from your reserve balance. It uses the reserve amount as a negative limit for your account balance.
If you add ₹1000 to your reserve balance, the negative limit of your account balance is automatically set at -1000. If you do not have a sufficient current balance, Razorpay will not fail your transactions until this limit is breached.