Refund vs. Reversal — What's the difference?
| Refund | Reversal |
What it is | A new transaction initiated by the merchant to return funds | Cancellation or adjustment of the original authorization |
When it happens | After the original transaction has been fully settled | Before or during settlement, or when the final amount differs from the authorization |
Amount | Full or partial amount of the original purchase | Full cancellation or amount correction (e.g., tip adjustment, final amount lower than hold) |
Timing | Can take several business days, up to 30 days. | Usually faster, often within hours or a couple of days |
Common reversal scenarios
Authorization voided — Merchant cancels the transaction before settlement
Amount correction — Final charge is less than the initial hold (e.g., fuel pump, hotel deposit, restaurant tip)
Expired authorization — Hold was never settled and automatically released
Common refund scenarios
Product return — You returned an item and merchant issues a refund
Service cancellation — You canceled a booking or subscription
Dispute resolution — Merchant agrees to refund after a complaint
Where do refunds and reversals go?
All refunds and reversals are deposited to your USD or EUR (depending on card currency) balance — not back to crypto.
Why USD and not crypto?
Kolo uses a pay-from-crypto architecture for card transactions:
When you make a card payment, your crypto is converted to USD at the moment of authorization
You pay the conversion fee once during this initial transaction
The merchant receives USD from the card network
When a refund or reversal occurs, the funds return as USD because that's what was actually sent to the merchant.
The benefit: No additional fees
Since you already paid the crypto-to-fiat conversion fee on the original transaction:
✅ Refunded USD goes directly to your fiat balance
✅ You can spend it again with no additional conversion fees
✅ Use your USD balance for future card purchases fee-free
Refund & reversal timeline
Type | Typical timeline |
Reversal (void/correction) | 1–3 business days |
Refund | 3–30 business days (depends on merchant) |
Tip: If you're expecting a refund, check your USD balance in the Kolo app. The funds will appear there once processed.
FAQ
Can I convert my USD balance back to crypto?
No, USD balance cannot be converted back to cryptocurrency. However, you can use your USD balance directly for card payments without any additional fees.
Why is my reversal or refund taking longer than expected?
Some merchants take longer to finalize transactions. If a hold hasn't been released after 30 days, contact support.
I received a partial reversal — is that normal?
Yes. This typically happens when the final transaction amount was lower than the initial authorization (e.g., you pre-authorized $175 at a fuel pump but only pumped $40).