A service provider that I contracted made a charge to my credit card by mistake and I asked for a refund. They say that they're unable to issue a refund directly to the credit card because this kind of operation if very frowned upon by their account processor and could result in their business account being terminated and black listed.
They are offering a refund by check but I'm currently out of the country and need the credit back to my card.
My question is, is it true that merchants get penalized for issuing credits or refunds back to their customers credit cards? I thought this was only the case when the customer initiated a chargeback which is a more serious dispute as it implies a possible illegal transaction.