Instant Refunds

Paytm now enables merchants to provide instant refunds to their customers in their bank accounts. Historically, depending on the payment method used by customer, the time taken to refund the amount would vary between 3-5 days. This delay undoubtedly provides a bad customer experience and higher customer escalations.

Please note: Instant refund is only available to select enterprise merchants who have integrated online or in-app payments with Paytm for their Business. Get in touch to request access to instant refund for your account.

Getting started with instant refunds

Instant refund is a three step process:

Step 1: Check eligibility of a transaction for instant refund

Instant refund should only be provided for payments made via Debit Card, Netbanking and UPI. Instant refund for Credit Card transactions should be enabled with caution - you should prevent customers from availing free credit by cancelling orders and accepting refund in a bank account. Refunds for orders paid via Paytm wallet and Paytm Postpaid are always instant by default and made to the respective method.

Step 2: Getting refund destination details for a customer

The merchant is expected to create a flow wherein you take customer’s bank account details to initiate refund. These bank account details have to be validated with Paytm. On successful validation, we return a customer asset token to initiate the refund.

Step 3: Initiating a refund

Pass the customer asset token in the refund request. Paytm processes the refund in the bank account of the customer after validating this token.

Types of refunds

Merchant Initiated refund


These refunds occur when merchant is unable to fulfil the order due to stock unavailability or any other reason.

Customer Initiated refund


These refunds happen when a customer has changed her mind about purchase or service pre and post order fulfillment.

Note: In case of customer initiated refund, bank account details should be taken as soon as the customer has initiated the refund (by canceling an order) in your app or website. In merchant initiated refund, a notification (SMS, Email, push) needs to be triggered by the merchant with a direct link to app or website where customers can input the bank account information. Sample user journey is provided for reference below

Demo of Paytm checkout flow in your app -


Customer Initiated

Overview of instant refunds

  1. Customer initiates a refund request

  2. You check the payment method of the transaction. If the payment method is Paytm wallet, Paytm Postpaid or Credit Card, instant refund should not presented as an option (reasoning detailed later). Payment method is provided after completion of transaction in Paytm payment callback. This can also be fetched using the transaction status API

  3. If payment method is eligible for instant refunds, present an option to the user to input bank account details

  4. Validate the bank account details with Paytm. On successful validation, Paytm will return an asset token. This bank account information and token can be stored against a customer for future refund requests

  5. Request the refund with the asset token using our refund API

  6. Post completion of refund, complete information is posted to your callback URL via success refund webhook. Additionally you can get the details using our refund status API

Find the detailed interaction of each system component in the flowchart below:

Transaction eligibility

Steps in processing instant refunds

Step 1: Checking eligibility of a transaction for instant refund

Eligibility of instant refund depends on the payment method of the order. This is provided in the callback URL or can be fetched using our Transaction Status API.

Merchant should not allow instant refunds on the following payment methods -

Paytm Wallet: Refund for payment made via Wallet is always credited back immediately in the user’s Wallet. Additionally disbursal of refunds for wallet payments is a breach in compliance. Hence, merchant should not take the bank account details for a Wallet transaction. In case merchant passes the asset token in the refund request for a Wallet payment, we will override the same and process the refund into wallet.

Credit Card: While Paytm supports instant refund of a credit card payment into customer’s bank account, merchant should use this very carefully. Customers can use the order cancellation flow in your application to take free credit into their bank account. You should handle it so this feature is not abused.

Postpaid: Refund for payment made via Paytm Postpaid is always credited back immediately in the user’s postpaid account.

Step 2: Getting refund destination details for a customer

Merchant should collect the following bank account details from the customer -

  • Bank account number
  • Bank IFSC Code
  • Account holder’s name

While only bank account number and IFSC code are mandatory to complete the instant refunds, other two fields are good to have as well.

After collecting the bank account information, call the Validate Asset API. Paytm will run multiple risk checks on your request. On successful validation, an asset token which is shared with should be sent using the Refund API to process instant refund. You can store this token and bank account details for the customer and use it for future refunds.

Caution: Wrong mapping of asset token to customer can lead to refunds getting processed to a different bank account.

Step 3: Initiating a refund

To initiate the refund into customer’s bank account, pass the asset token in the refund request. There are scenarios wherein we will change the instant refund destination to original payment destination even if you share otherwise -

  • If token is passed for a transaction where payment was done via Paytm Wallet. In this case we will refund the money into customer’s wallet
  • In case of failure of refund to the requested bank account, we will automatically refund to the destination from which the payment was made delaying the process of refund
  • In case the refund destination is flagged by cyber security authorities, then refund will be sent to the destination from which the payment was made

The destination information is posted on your callback URL via success refund webhook or can be fetched by refund status API

In case of any issues with integration, please get in touch.