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.
Instant refund is a three step process:
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.
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.
Pass the customer asset token in the refund request. Paytm processes the refund in the bank account of the customer after validating this token.
These refunds occur when merchant is unable to fulfil the order due to stock unavailability or any other reason.
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
Customer initiates a refund request
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
If payment method is eligible for instant refunds, present an option to the user to input bank account details
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
Request the refund with the asset token using our refund API
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:
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.
Merchant should collect the following bank account details from the customer -
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.
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 -
In case of any issues with integration, please get in touch.