early 15c., "compensation, payment for a debt or obligation; satisfaction, amends; retribution, punishment," from Medieval Latin recompensa and Old French recompense (13c., related to recompenser "make good, recompense"), from Late Latin recompensare (see recompense (v.)). The notion is "an equivalent or recompense for anything given," especially "reparation or restitution to another for some wrong done to him." Earlier in the same sense is recompensation (late 14c., from Late Latin).
c. 1400, recompensen, "to redress, provide as an equivalent," from Old French recompenser (14c.) and directly from Medieval Latin recompensare "to reward, remunerate," from Latin re- "again" (see re-) + compensare "balance out," etymologically "weigh together," from com "with, together" (see com-) + pensare, frequentative of pendere "to hang, cause to hang; weigh; pay" (from PIE root *(s)pen- "to draw, stretch, spin"). For the financial sense of the Latin verb, see pound (n.1).
By early 15c. specifically as "to compensate, pay for services rendered or for loss of property, rights, etc.; make amends for by some equivalent; dispense punishments or rewards." "The spelling -ence is more frequent than the etymological -ense ... until the 19th c." [OED]. Related: Recompensed; recompensing.