This setting lets you decide that players receive refunds into a club wallet rather than back to the payment method they originally used.
On: a player who paid by card, Apple Pay or Google Pay and then cancels gets the money in their club wallet.
Off: refunds return to the original payment method.
It only affects real refunds
A payment that was still reserved was never charged, so there's nothing to refund — the reservation is simply released and the pending amount disappears from the player's account. The wallet setting has no bearing on that.
Consider carefully before enabling
This significantly changes what happens to players' money and they will notice. Discuss it with your business partners first, and make sure front-desk staff know it's active so they can answer questions.