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 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
If a refund or reversal happens later, the funds return in fiat, because that is what was originally sent through the card network.
The Benefit: No Additional Conversion Fee
Because the crypto-to-fiat conversion already happened during the original payment:
✅ 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
FX Rate Recalculation During Clearing
In some cases, the issuer may recalculate the exchange rate between authorization and settlement.
This can result in a small:
additional debit, or
partial refund
after the transaction is cleared.
⚠️ Important: This is normal card network behavior and may happen even if the merchant amount has not changed. It is typically caused by the difference between the rate used at authorization and the rate applied during clearing.
Refund and Reversal Timelines
Type | Typical timeline |
Reversal (void/correction) | 1–3 business days |
Refund | 3–30 business days (depends on merchant) |
💡 Pro tip: If you are waiting for a refund or reversal, check your fiat balance in the Kolo app. Returned funds appear there once processed.
Closed or Frozen Cards
You can still receive a refund or reversal even if your card is:
frozen
closed
no longer available for new spending
The returned funds are still credited to the appropriate balance.
Business Cards
For business cards, refunds from closed or deleted cards still go to the company wallet. This means the refund is not lost even if the original card is no longer active.
FAQ
Can I convert my refunded USD or EUR balance back to crypto?
Can I convert my refunded USD or EUR balance back to crypto?
No, Refunded fiat balances cannot be converted back to cryptocurrency. However, you can use the fiat balance directly for future card payments.
Why is my reversal or refund taking longer than expected?
Why is my reversal or refund taking longer than expected?
Some merchants take longer to finalize or return transactions. Refund timing depends on the merchant and the card network. If the returned amount has not appeared after 30 days, contact support.
I received a partial reversal — is that normal?
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).
Can I still receive a refund if my card is closed or frozen?
Can I still receive a refund if my card is closed or frozen?
Yes. Refunds and reversals can still be processed even if the card is frozen or closed.
Where does a refund from a closed business card go?
Where does a refund from a closed business card go?
Refunds from closed or deleted business cards are credited to the company wallet.
Why did I get a small extra debit or a small extra refund after settlement?
Why did I get a small extra debit or a small extra refund after settlement?
This can happen when the issuer recalculates the FX rate between authorization and clearing. Small adjustments like this are normal Visa or card network behavior.
Need Help?
If you are waiting for a refund, noticed a partial return, or are not sure where the funds should appear, our support team will be happy to help.