A refund fee is a charge connected with returning money on a payment. In merchant acquiring it usually means a fee that an acquirer, processor or payment gateway charges the merchant each time a refund is processed. Some providers return the percentage part of the original payment processing fee but keep the fixed part; others keep everything, so a refunded sale still costs the merchant money.
The term is also used for a fee a merchant deducts from the amount it returns to a customer, such as a restocking fee on returned goods or a cancellation charge. Whether that is allowed depends on the merchant's terms and on consumer protection law, which in many countries restricts deductions for faulty goods or distance-selling cancellations. Refund fees should not be confused with a chargeback fee, which is usually much higher, one reason merchants prefer to issue a refund before a dispute is raised.