What is a refund?
A refund, in the broadest context, is giving customers their money back after purchasing products for specific reasons.
A refund often occurs in retail businesses or tax-related work. To maintain great refund service, businesses need to have transparent refund policies. These regulations are often about the specific amount of time that customers can return the product, the type of refund (return the purchase price or replace the product), and (if applicable) the person who will be responsible for the shipping cost.
Types of refunds
This is the reason why the definition above refers to the broadest context. There are two types of refunds, which can be unrelated to each other at some points:
- Cash refund: This type of refund refers to the situation when customers demand to get money back, in exchange for a return of the purchased product due to specific reasons. The refund should follow the company’s refund policy. Some companies allow customers to demand a refund without specific reasons. Others may only accept the exchange of goods, such as giving customers a replacement item or a voucher.
- Tax refund: This is a reimbursement from the government of tax for an overpayment. A tax income is calculated by the tax office, based on how much tax a person has overpaid.
What are the possible reasons for a refund?
- For cash refund: Customers might be unsatisfied with the products, due to some fault or a change of mind. For this reason, online shoppers are more likely to require a refund, because the purchased product can be not similar to their expectations.
- For tax refund: Tax refunds may follow several steps which are more complex than a cash refund. The most common reasons for a refund can include:
- Required travel fees that are part of your business role
- Payment of protective clothes or tools needed for work
- Phone/internet bills due to working from home