What happens if I refund the customer?

If a full refund was issued to a customer prior to a dispute being filed, then you simply need to provide proof of the credit to the issuer for the chargeback to be reversed.

If you refund a customer after you have received notification of a dispute, then you have credited the cardholder’s account a second time, as the dispute already provided a refund to the customer through a chargeback.

Basically, issuing a refund before a dispute was filed is a tactic to prevent a chargeback. Issuing a refund after the dispute was filed may result in a revenue loss that is double than the initial amount.