Transaction Fees for Paypal and Stripe when a refund is made ? They seem to be now keeping them....

[John_from_Londo]

The other day I had a £714 order that had to be cancelled due to a stock delay. I didn't realise this but Paypal refunded the customer £714 but still takes the £21 transaction fee and makes no refund to me on this. I realise there is a cost for them on this but I can see they have only changed this rule last year and before that they refunded the transaction fee to the seller also. I am shocked that during the pandemic they have done this when the increase in revenue they must be getting already is massive. I'm now seeing that Shopify and Stripe also do this. 

Can someone tell me if I switch to manual payment capture and pre-authororise only when the customer places the order, if I have a stock problem or delay and need to cancel do I still have to pay a transaction fee?  I am not sure if its only me but Paypal transaction fees are big enough let alone they still charge when the poor reseller needs to refund due to the customer changing their mind or the poor seller having a stock problem, they could at least go halves....  

Love to know if everyone knows about this.

[Helen]

Hey, @John_from_Londo. Thanks for starting this discussion.

While I can’t speak for the way Paypal, Stripe or other third party gateways handle their fees in regards to refunds, I can give some insight about how we do things here at Shopify. The long and short of it is that there is a cost involved when processing a refund. And so we, like other businesses, need to cover those costs; Therefore the credit card fees on Shopify Payments, and the transaction fees on third party payments are not returned to the merchant when a refund is processed to their customer. This aligns with our existing Shopify Payments Terms of Service. However, please note, that when using Shopify Payments we won’t charge you any additional fees to process the refund, like many other payment processors do.

That being said, payment processing fees are only accrued once a payment has been captured. Therefore, if you choose to capture your payments manually, and your customer changes their mind within the authorization period before the payment has actually been processed, then there would not be any processing fees applied (transaction or credit card). Thus, in that situation, you would then just cancel the order without capturing payment, which wouldn’t involve any exchange of funds (ie. no payment processing fees to process or return). Does that make sense?

I hope this helps! If you have any further questions or concerns about it, please let me know.