Do you know that 30% of all online purchases are returned compared to 8.89% in brick-and-mortar shops? That is why it is important to have a returns feature. If you want you can use the Shopify POS to handle returns and refunds. But for that, you need to know the Shopify payments refund and return process.
By understanding this, you can evaluate and recognize the time it takes to complete the refund on Shopify. So, what are you waiting for? Let’s dive into this article.
What is Shopify Refund Policy?
First of all, allow me to tell you the refund rules that are applicable to all international merchants using Shopify Markets.
- Refunds use the same payment method opted to purchase the order. In other words, you cannot provide a refund to another bank account or a different card.
- You can only deliver a refund in the same currency that a buyer used to pay for their order. For instance, if you bought a product paying the amount in US dollars, you will receive the refund in US dollars.
- When the currency has to be converted for a refund, the current currency exchange rate is applied, not the currency rate at the time of placing the order.
- You are charged a currency conversion fee when your payment for the order is converted but this is not applicable to the refund process.
- Also, the currency conversion fee is not returned to you when a refund is issued.
- In case you are using manual conversion rates, then the refund is calculated as per the current conversion rate.
Note: Since the currency conversion rates always fluctuate, the refund you receive will be often different from the payment you make while purchasing a product or service.
Moreover, when a customer no longer has access to the original payment method, you must contact the bank or agency to claim and get the amount.
Let’s say that you are running a store that sells products or services in USD and EUR. Plus, your payout currency is in USD.
Now, a shopper buys a shirt for €85. At the time of payment, the currency rate is 1 EUR = 1.18 USD. So, for the payout, the amount is converted to $100.
After a few weeks, the purchaser decides to return the product. Therefore, you have to initiate the refund of the original amount which is €85. However, the current conversion rate is 1 EUR = 1.29 USD. As a result, you have to convert $110 which is $10 more than the original amount you received.
Here in this example, you have lost money. But if the conversion rate has moved in the opposite direction (say, 1 EUR = 1.05 USD), then you would have gained money.
About Shopify Returns Policy
Since each store sells different products and has its own needs and requirements, Shopify allows you to define your own return policy. And, you may do it in any of the below-mentioned two ways.
- Add or generate your own policies.
- Use available templates.
Remember that you are the one who is responsible to ensure the defined policies are followed properly not Shopify.
Now that you understand the return and refund policy of Shopify, let’s learn about the refund process.
Also, read about Shopify Returns Process from here!
What is Shopify Refunds Process?
Before we start, you need to know certain points.
- You can refund for either an entire order or only part of the order.
- Without creating a return, you can provide a refund. But, you cannot create a return after a refund is issued.
- In some cases, you may give a refund by canceling an order.
Usually, when you issue a refund, the amount is deducted from the next available payout. In most cases, your customers will receive the refund within 10 business days. However, when your payout doesn’t have enough funds, the outcome differs based on your location.
- In Australia, Canada, and the United States, the remainder of the refund gets debited from your bank account on the payout day.
- When it comes to other countries, the money gets debited from the next payout till the refund amount is covered.
If there is a negative balance in your Shopify Payments account, you may not be able to issue a refund. And, the refund status is changed to pending. When you make sales and earn a positive balance in your account, you can issue a refund successfully.
In case you cannot earn a positive balance, there is a chance to make repayment manually.
Note: The payout is tried again in 3 business days in case of a failed negative balance payout.
Further, based on the duration of arrears and your balance, the Shopify Recovery team may contact you to address the negative balance.
Partial Refund Process
When you are issuing a refund only for specific items in an order, you can use the partial refund. Additionally, you can use it to deliver the refund in parts until you cover the original amount.
Generally, if a shopper buys an item using both a gift card and another payment method, you perform a partial refund. Here, the refund first applies to the gift card, and then the remaining amount is credited to another payment method.
Also, you can manually adjust the amount that is to be refunded for each payment method.
How Long Do Shopify Refunds Take?
Usually, the refund time depends on the merchant, the return method used, and the card issuer.
- For a debit or credit card refund, it takes 5 to 10 business days.
- With gift cards, the refund is issued immediately.
Note that Shopify doesn’t have functionalities to provide store credit. For that, you need to use third-party applications. So, the only alternative available is gift cards.
While issuing a refund, if your customer’s card is canceled or expired, then the bank usually sends the amount to a new card or to the bank account.
Also, read – Steps to Prevent Returns Fraud
Bonus Tip: Use Helplama Helpdesk for Returns and Refund Management
With Shopify, there are limitations to the refund process such as
- You cannot use store credits as a refund,
- If your customer doesn’t have access to the original payment method, you need to contact your bank to claim the amount.
- There is no way to automate tasks.
That is why we suggest you try the Helplama Helpdesk. It is an automated eCommerce returns management software that allows your buyers to return or exchange their orders based on your policies. Also, your users can modify their orders as per their wish. More features include the following –
- Return label – Both your agents and customers can download the return label with just one click.
- Through the in-built portal, your users can initiate returns/exchanges and inform you of their reason for returns.
- Anti-refund strategies – Implement the anti-refund strategies using Helplama’s AI algorithm to reduce return rates.
- Promotional messages – Through AI understand your customers and send discounts and offers. You can use this to reduce refunds.
- 24/7 order monitoring – Tracks your consumers’ orders all the time and automatically detects any issues like delays and informs you. In this way, it allows you to resolve the issues proactively.
- Integrations – Seamlessly integrate with Shopify, Magento, and WooCommerce. Also, Connect with social media, messaging, and collaboration platforms. For example, Instagram, Facebook Messenger, WhatsApp, Twitter, Slack, and so on.
There are more features that can help you to scale up your business such as customer support, marketing, self-help, agent training, and hiring. To learn about them, click on the below links.
In The End!
The refund Shopify payments process might seem like it is not taking too much time. But as you can see, there are many things you need to consider while using Shopify. Plus, because of its limitations such as having no automation, the refund process may get delayed.
If you want to deliver a better customer experience and scale up your business, then we suggest you use the Helplama Helpdesk. Its automated returns management system not only takes care of your customers’ returns or exchanges but also helps you to resolve their issues quickly.
So, what are you waiting for?
Start your 15-day free trial here! No credit card is required!