One of the most important aspects while running an eCommerce business is the ability to process refunds. As a Shopify store owner, you need to clearly understand the refund process on Shopify to provide exceptional customer service and maintain a positive reputation. In this article, we will present a detailed guide on how to refund on Shopify, including the different types of refunds, Shopify refund policy, and how to issue a refund on Shopify using Shopify POS.

Whether you’re a beginner or an experienced Shopify merchant, this guide will provide valuable insights on handling refunds and ensuring customer satisfaction.

In this guide, we will cover 4 key points:

How Does Shopify Refunding Work?

Shopify offers a flexible and user-friendly refund system that allows merchants to process refunds quickly and efficiently. Shopify refund time is 5 to 10 working days. To put it simply, your customers will get their money back after 5-10 business days.

Besides giving your customers full refunds, Shopify also provides you with another refund option: giving your shoppers partial refunds.

Shopify partial refunds work similarly to full refunds, but instead of refunding the entire order, you can select specific items or a portion of the total cost to refund. This is useful when the customer wants to keep some items in their order but return others.

Shopify also allows you to set up your own refund policies, which can include rules around return timeframes, restocking fees, and the condition of the returned item. This gives you greater control over the refund process and helps to boost your store’s trust.

In addition, Shopify offers various payment gateway integrations that can automate the refund process and streamline operations, making it easier for you to manage refunds efficiently. Let’s move to the next guide on how to refund on Shopify!

How to Set Up Return on Shopify?

Setting up a return on Shopify is very simple. But before creating a return on Shopify, based on my experience, here are a few things you should keep in mind:

1. The order you create a return for must have at least one item that has been fulfilled but has yet to be refunded. If there are no fulfilled items, you should make a refund and restock them instead.

2. If you bought a shipping label for the order but haven’t used it, you should invalidate it before setting up a return.

Now, follow the steps below to create a return on your Shopify store.

1. From the left sidebar menu in your Shopify dashboard, navigate to Orders, then select the order you want to refund > Click Return at the top page.

2. In the new window, you need to enter the following information:

Fulfilled: the number of items you want to return.

Return shipping options: you can select one of the options below:

Go for Upload return label to upload an available return shipping label for your customer. On the Add return label page, upload files (PDF or JPEG) for your shipping label. You can fill in the Tracking number and Shipping carrier if you know them.

Choose Add a return label URL to create a return shipping label for your customer. This option works only when both your primary location and customer shipping address are in the US.

Check the No return shipping option to create a return for your order without any return shipping information.

3. Finally, hit Create return button under the Summary section on the right side of the page.

Next, let’s explore how to refund on Shopify using Shopify POS!

How to Refund on Shopify Using Shopify POS?

Now that you know how to refund an order on Shopify, what about how to refund on Shopify using Shopify POS? Let’s explore it in the section below.

Shopify POS is a POS tool that allows you to sell your products in person. With Shopify POS, you can sell anywhere, including physical storefronts, markets, and pop-up shops. For more information, you can take a look at our Shopify POS system guide.

Follow the guide below to do a partial refund or full refund with Shopify POS.

1. From the home page of the Shopify POS app, click Orders.

2. Select the order containing the item you want to refund, then hit the Return button.

3. Adjust the quantity of the refunded items using the “+” and “-” icons. After that, press Next. Besides these required options, you may consider the following OPTIONAL elements:

If you do not wish to return an item to your inventory, press Restock at this location, uncheck the Restock option, and then hit Save.
Enable Refund shipping option if you want to refund the shipping fee for customers.
Check the Refund balance to gift card option if you wish to give customers the refund amount in the form of a gift card. However, in order to make this option available, the gift card product must be published to the POS sales channel.
Click on Add note under the REASON FOR RETURN section to add a reason for the return.

4. If the clients use multiple Shopify payment methods, you can distribute the return amount among them. Enter the amount you want to refund to each payment method by clicking Edit in the Amount to Refund box. Please note that the most you can refund using a certain payment method is the amount the customer actually paid.

5. When you complete the information above and are ready to process the refund, hit the Refund button.

6. Then press Mark as refunded to proceed to Shopify payment refund. After that, you can give the customers a receipt if they need a copy.

7. Lastly, click Done to finish the process of the Shopify refund.

Check out these articles to learn more about Shopify:

What to Consider For a Smoother Refund Process?

In this section, let me show you some useful and practical tips to streamline your return and refund process and increase your store’s credibility.

Set up clear Shopify return policies

To my mind, setting up clear return policies on Shopify is important before creating a refund for several reasons.

It sets clear expectations for customers: A clear return policy helps customers know what to expect if they need to return an item or request a refund. This can help reduce confusion and potential disputes.
It can reduce customer support inquiries: With a clear return policy, customers can often find the information they require without contacting customer support. This can save time and resources for your business.
It helps you manage refunds more efficiently: When you have a clear return policy Shopify, you can easily determine which refunds are eligible and what the refund process should be. This can make managing refunds easier and ensure they are processed correctly.
It can protect your business: With a clear return policy in place, you can ensure that refunds are processed in a consistent and fair manner. This can help protect your business from fraudulent claims or disputes.

When do you need to refund on Shopify?

Below are some situations that may require a refund on Shopify:

Firstly, The customer received a damaged or incorrect item: If the customer received an item that was damaged or incorrect, you may need to issue a refund.

Secondly, The customer did not receive their order: If they did not, you should check and issue a refund or reship the item.

Thirdly, The customer canceled their order: If the customer canceled their order before it was shipped, you have to issue a refund.

Fourthly, The customer was charged twice: If the customer was accidentally charged twice for their order, you need to check it and then issue a refund for the duplicate charge.

Finally, The customer is unhappy with their purchase or the item did not meet the customer’s expectations: In such cases, you should consider issuing a refund according to your Shopify return policy.

How to deal with an insufficient payout balance to cover your Refund?

If you have an insufficient payout balance to cover a refund on Shopify, you can try some tips mentioned below:

Use your own funds: If you have enough funds in your personal account, you can use them to cover the refund. You can then wait for the next payout to replenish your account balance. It’s important to prioritize paying back the refund as soon as possible to avoid any negative consequences.
Process a partial refund: If you do not have enough funds to cover the full amount, you can issue a partial refund. To put it simply, you will refund a portion of the payment to the customer rather than the full amount.

Besides, from my point of view, you need to communicate with your customers about any refund delays or issues and keep them updated on the status of their refund. You should also have a plan to avoid insufficient payout balances in the future, such as monitoring your inventory levels, adjusting your pricing strategy, or setting aside funds for refunds in a separate account.

Want to start an online store but do not know where to start? Try Shopify now! Shopify offers you all you need to run a successful online shop quickly with no coding experience. Let’s read our Shopify review to get a complete understanding of Shopify.

How to Refund on Shopify: FAQs

[sp_easyaccordion id=”57570″]

Final Words on How to Refund on Shopify

In conclusion, Shopify’s refund system is designed to be simple and effective, providing the tools to process refunds and maintain positive customer relationships. However, it’s important to clearly understand the refund process and how to handle common refund situations, such as insufficient payout balances.

By setting up clear return policies and communicating effectively with customers, you can provide a better customer experience and protect yourself from potential disputes or fraudulent claims. Whether you are processing a full or partial refund, you need to ensure that refunds are processed efficiently, fairly, and according to your return policy.

Hopefully, by following this tutorial, you will know how to refund on Shopify and ensure that your customers are satisfied with their purchases from your store.

Follow LitExtension blog and join our Facebook Community to learn more tips about eCommerce.

Explore more about other Shopify tutorials: