Refunds are a feature on PG that allow you to return funds back to the payment source. If the PG on your account is linked to Marketplace then you also need to factor out how vendors will bear the liability for a refund. 

By default the balance of respective vendors are debited in the proportion of their commission for the order. For example, lets say there is an order of Rs.100 where Vendor 1 gets Rs. 60 and Vendor 2 gets Rs. 40. This order has a refund of Rs. 50 against it. In such a case the Vendor 1 will receive a debit of Rs. 30 on their balance and Vendor 2 will have a debit of Rs. 20 against it. This will be adjusted in the next payout to the respective vendors. 

However, this feature can be turned off in your account if you want to handle the debits against the vendors yourself.

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