If you attempt to do a Refund and get a decline error, it means the card issuer is indicating that the cardholder's account cannot accept a Refund. When a Refund decline occurs, the cardholder's payment method cannot be refunded.
The following are common reasons for declines:
The card account has been closed
Due to fraud, the card account has been frozen
Refunds cannot be made on certain card accounts (e.g. some prepaid cards)
The payment was charged back
What to do about it?
Here are some ways to handle this type of error:
Refund the customer via a paper check
Refund the customer on another payment made with a different payment method
You will also want to be sure to get a new payment method from the customer for any future payments (if applicable).