How do I refund a buy now, pay later order?

To refund a buy now, pay later order, use the provider's own refund flow instead of a card refund. Afterpay says a customer refunded straight to their card still owes the instalments, and Klarna and Affirm each set their own clocks that decide whether a refund counts or a dispute follows.

Why does a card refund go wrong on a pay-later order?

Pay-later orders are now a large share of online sales. Adobe counted $20 billion of US online holiday spend paid with buy now, pay later in 2025, up 9.8%, and Cyber Monday was the first day on which pay-later orders alone passed $1 billion. Those orders come back as returns in January like any others.

Afterpay explains the problem on its help pages. A customer refunded directly to their card by the merchant still has to pay the Afterpay instalments, because the loan with Afterpay has not changed. The customer sees money arrive on the card and a bill still due to the lender, which is how a refunded customer ends up in your dispute queue.

Before anyone presses refund, support should check which provider took the payment.

How do Klarna disputes and refunds work?

Klarna gives the customer a long window to dispute. Through Stripe, a Klarna customer can dispute up to 180 calendar days from capture, and most cases start as an inquiry with a 21-day window. An inquiry is the early stage, before the case turns into a chargeback (a forced reversal of the payment).

The inquiry is your cheap exit. A full refund during the inquiry avoids any dispute fee and stops escalation, but once the case has become a chargeback a refund can no longer be issued. Filing an inquiry also pauses the customer's repayments, so a customer waiting on you has every reason to leave it open. Whether a refund costs less than a dispute is covered in deciding whether to refund or fight a chargeback.

Klarna's merchant documents tie liability to the return method too. If the customer used your return label, you are liable even if the parcel is lost on the way back. Choosing "adjust statement" commits you to the refund, and Klarna charges back automatically if it is not issued within 96 hours, so pick that option only when you are ready to pay.

What are Affirm's refund rules?

Affirm sets a different trap. Its refund documentation says a refund goes through only if the merchant has received the returned goods and processes the refund within 120 days of purchase. Interest the customer has already paid is not refunded.

Partial refunds behave in a way customers rarely expect. Affirm applies a partial refund to the final monthly bill first and then to earlier ones, so the customer's next payment does not shrink. A shopper who returns half an order in month two may still see the same bill and think you never refunded.

A line in the return confirmation explaining how Affirm applies the credit costs nothing and heads off that confusion.

How long do you have on an Afterpay dispute?

Through Adyen, an Afterpay dispute gives the merchant 13 days to defend or accept. No response counts as a loss, and Afterpay then has 30 days to decide.

Those deadlines are set by the provider, so a pay-later queue needs its own owner and its own calendar. Check today who in your team watches pay-later disputes and what date each one is due.

Takeaway: what to do this week

1. Show the provider on every order. Put the pay-later provider's name next to the payment method on the order record, so support sees it before they hit refund.
2. Answer Klarna inquiries within days. Where the order is plainly refundable, refund in full during the inquiry, while the refund still avoids a dispute fee.
3. Refund Afterpay and Affirm from the provider's dashboard. Add a note to the customer explaining how their instalments will change.
4. Calendar pay-later deadlines separately. An Afterpay dispute through Adyen gives you 13 days, and silence counts as a loss.

Sources: Adobe, 2025 holiday shopping season release (7 January 2026); Stripe Docs, "Klarna disputes"; Klarna Docs, "Merchant evidence gathering"; Affirm Docs, "Refunds" (13 November 2025); Afterpay Help, "I am still being charged but the merchant refunded me directly to my card" (undated); Adyen Docs, "Afterpay chargebacks". All checked 24 October 2026.