How does Shopify get away with charging fees on a cancelled transation?

Robert48504
Tourist
5 0 54

A customer immediately contacted me to cancel a transaction they said they made in error. I immediately cancelled the 29.98 transaction and issued them a refund. I get a notice that Shopify is still charging me a fee of $1.17 so I contact support. This is what they said:

 

  • Lucky

    You were never technically charged the transaction fee in this order since it was cancelled.

  • then what is the 1.17 they are deducting from my account?

  • Lucky

    It was never deducted from your account. It was deducted from your assumed payout.

  • so 1.17 was deducted from a payout I never received for a transaction that was cancelled

  • Lucky

    Yes.

  • lol

     

     

     

Replies 30 (30)

Julie_Sheldrick
Tourist
10 0 58

We need to make a LOT OF NOISE about this.  Some of my transaction fees are £60-100 - THIS IS STEALING MY MONEY.  IF I NEED TO REFUND THE CUSOMER IN FULL HOW THE F CAN SHOPIFY KEEP £60-100 OF MY HARD EARNED MONEY

 

CAT18
Tourist
5 0 25

They’re doing absolutely nothing about these issues, and they are making. Fortune off of cancelled orders! Very upsetting. 

Shay
Shopify Staff
2818 440 576

Hi @Robert48504 

Thank you for sharing your feedback here in our Community Forums about the transaction fee you were charged for an order that was cancelled. I understand that you reached out to our live support for some clarification around this but it sounds like there was some confusion during the chat and that you may not have gotten a clear answer. If that is the case, I want to apologize for that. We strive to provide the best in customer care and service and if you feel that the support you received was not up to that standard, please reply back to the ticket email you should have received and let us know! Our conversations with our merchants are constantly reviewed for quality and feedback you provide is shared with the team involved.

In regard to the transaction fee you were charged for this order, Shopify does not refund transaction fees processed through Shopify Payments when an order is cancelled or returned to the customer. I understand you may have some concerns around that and I am happy to share some additional clarification on this process for both yourself and @Julie_Sheldrick.

Our policy and stance on this process is available in our Shopify Payments Terms of Service agreement, which can be reviewed here: Shopify Payments Terms of Service USA, specifically section D5. I'll provide a quote of the section here for easier review:

We will have the final decision-making authority with respect to Claims, including, without limitation, claims for refunds for purchased items that are filed with us by you or your customers. You will be required to reimburse us for your liability. Your liability will include the full purchase price of the item plus the original shipping cost (and in some cases you may not receive the item back). You will not receive a refund of any Fees paid to us.

This change to the way payments and refunds are processed has become an industry standard over the past 2 years or so and many payment gateways apply this rule to their refund policies. This decision is made in alignment with the banking institutes that power Shopify Payments. If you have additional questions about this process, please let me know.

-Shay

Shay | Social Care @ Shopify 
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Robert48504
Tourist
5 0 54
Yes, because your chat support told me Stripe collected these fees, I
contacted Stripe directly and their reply was that Shopify fee is keeping
the fee and it is not Stripe. The customer requested that we cancel the
order, it was not me. I cancel an order on any other platform and the fees
are cancelled / reversed right along with the transaction. How much does
Shopify make off of this shady activity?

Shay
Shopify Staff
2818 440 576

Hi Robert,

While there could be fees being charged to Shopify for the processing of transactions through Shopify Payments, part of the fees not being refunded is also to pay for the infrastructure of the system itself. I understand that you did contact Stripe about this, they are definitely one of the payment systems that is utilized within Shopify Payments. In case they didn't share this with you, the action of not refunding the transaction fees is also in line with Stripe's own policies on this (Stripe: Understanding Fees) and even PayPal's (PayPal: Understanding Fees). While this may not be an industry standard for in-person sales, it is for online payment processing.

If you are using Shopify Payments and want the option to review your orders before finalizing payment capture from the customer's card, you can do so. This gives you a chance to cancel/refund orders without being charged a processing fee for the payment. You can learn more about how to capture customer payment in our Help Center here: Shopify Help Center - Capturing Payments

I recognize your feedback and I know that if you weren't prepared for these fees to not be returned that it can come as a surprise. I will ensure your feedback is shared with our team on this and I'm happy to assist if you have additional questions on this topic.

-Shay

Shay | Social Care @ Shopify 
 - Was my reply helpful? Click Like to let me know! 
 - Was your question answered? Mark it as an Accepted Solution
 - To learn more visit the Shopify Help Center or the Shopify Blog

Robert48504
Tourist
5 0 54
I have been using PayPal since 1999. NOT ONE TIME did they EVER charge me
for a cancelled transaction. I also had a retail location since 1980. I am
definitely not a newbie, please don't insult my intelligence. Just admit
the truth... Shopify uses this as a loophole to profit off the backs of
their customers.

Julie_Sheldrick
Tourist
10 0 58

Robert.  you will NOTE:  shopify are going to charge you 2% ON EVERY TRANSACTION IF YOU USE PAYPAL.  ON TOP OF THE PAYPAL FEE.

Julie_Sheldrick
Tourist
10 0 58

Shay

 

SHOPIFY IS STEALING BETWEEN £60-100 EACH OF MY CANCELLED ORDERS.  THIS IS OVER THE TOP - ROBBERY!!!!!

THE FINANCIAL OMBUDSMAN HAS TO STEP IN HERE.  SHOPIFY IS STEALING MY HARD EARNED MONEY

CAT18
Tourist
5 0 25

Similar situation. Client tried purchasing an item. Signified (app that works with Shopify for fraud prevention) flagged it was automatically cancelled. I checked my order read such.  Client then tried two more times and same thing. I wound up manually making the sale as I know he wasn’t fraud. Meanwhile all three transaction attempts he made all were cancelled instantly. I chatted with support who confirmed they read cancelled as I wanted to be sure he wouldn’t be charged three times and I wouldn’t have to deal with refunds.
Two days later Shopify sends the money to my bank even though the transactions were CANCELED. Now I had to do refunds for my client, and I’m charged the transaction fees? You want to tell me where in Shopify’s policy it reads that a sale cancelled instantly for fraud automatically, and 5 days before payment to my bank I’m left holding the bag? Shopify has been very unhelpful pointing me to terms that apply to refunds of which I am very aware of, and comply. This is a whole other issue and I should not be paying any fees because as I said the sales were instantly and automatically cancelled! 241 dollars is a lot of money to swallow for an error on your end. 
Now I’m even more concerned about our more expensive products. We have items into the thousands online. If a consumer tries to buy an 80,000 item and it is cancelled for potential fraud am I expected to swallow thousands I. Transaction fees? Would really appreciate a resolve because this is not about arguing fees for refunds! 

ByeShop-ify
Excursionist
19 0 22

Yep.. Also burnt by Shopify for this.

 

We had a larger transaction that Shopify flagged as  HIGH risk, Upon looking within 90 seconds of the order being placed, we cancelled it as it was guaranteed fraud.    Massive fee hit by shopify, so we lost doubly out!   Contact chat support, told because it was done as a refund (our mistake we accept) we would be charged fees and nothing could be done.. Their words: " IN FUTURE USE THE CANCELLATION METHOD AND NO FEES ARE APPLICABLE" !!! 

 

Fast forward a week, another transaction, fraudulent, high risk.. We CANCEL the order.. (CANCEL if you missed it first time round)..  And low and behold.. Transaction fees charged by Shopify YET AGAIN!    So it seems your call centre workers are also lying about the fees charged..    

 

I'm sure like all the others here, Shopify will just invoke silence as their answer..   Just how scammy are you shopify?

Leslie_Wiles
Tourist
8 0 27

THIS IS A TOTAL SCAM BY SHOPIFY. AMAZON DOES NOT CHARGE FEES FOR CANCELED/REFUNDED ORDERS. I'VE HAD 2 ORDER THAT WERE CANCELED WITHIN 20 MINUTES, AND WAS NOTIFIED MONEY WAS BEING WITHDRAWN FROM MY ACCOUNT FOR THE PROCESSING FEE ON THESE CANCELED ORDERS. NO MONIES WERE EXCHANGED. THIS IS THEFT AND FRAUD BY SHOPIFY. IN NO WAY CAN A VENDOR BE LIABLE FOR PROCESSING FEES FOR CANCELING AN ORDER AT A CLIENTS REQUEST!!! MAKES ABSOLUTELY NO SENSE NOR IS LEGAL. IF SO, THERE WOULD BE AN OPTION TO REFUND LESS PROCESSING FEES. THEY ONLY STARTED DOING THIS SINCE THE PANDEMIC. I WILL BE CONTACTING MY LAWYER IMMEDIATELY. A CLASS ACTION LAWSUIT WILL BE FILED. STAY TUNED FOR WEBSITE LINK TO JOIN. 

*Until then, set your payment capture to manual, so that they authorize for the charges, but don't capture until you (the vendor) approve the sale. 

SHOPIFY IS GOING TO LOSE A LOT OF CUSTOMERS OVER THIS SHADY PRACTICE AND OUTRIGHT THEFT.

Shay
Shopify Staff
2818 440 576

Hi Leslie,

 

Thank you for reaching out to the community forums to share your experience with transaction fees and refunds on your store as well.

 

I recognize your frustration if you were not aware of this policy before refunding this transaction. The terms of use for Shopify Payments does include this information and it is also inline with other major online payment processors. This policy was introduced at the beginning of 2020 for all merchants located in the USA. 

 

Shopify payments is an optional payment gateway and you have the ability to choose an alternate gateway that better suits your business and your needs. You also have the ability to refund a customer less processing fees at any time. When processing a refund you can change the refund amount to reflect that before processing.

 

You can read more about this policy for Shopify, PayPal and Stripe using the links below:

 

 Paypal - Refund Payments for Individual Transactions 
 Understanding fees for refunded payments : Stripe: Support 
 Shopify Payments Terms of Service - Canada - Shopify 

 

The decision to move forward with any form of legal action is entirely yours to make. If you wish to connect with our legal team you can email them at legal@shopify.com at any time and they can further assist with your concerns. 

Shay | Social Care @ Shopify 
 - Was my reply helpful? Click Like to let me know! 
 - Was your question answered? Mark it as an Accepted Solution
 - To learn more visit the Shopify Help Center or the Shopify Blog

Robert48504
Tourist
5 0 54

I like how shopify staff say these fees are inline with other major processors, but I have yet to find any that doesn't reverse the fee right along with the cancelled transaction. Shopify is the only one gouging their customers and keeping this fee. When I originally contacted Shopify customer service, they specifically told me it was Stripe keeping the fee. I contact Stripe and they say no that is incorrect it is Shopify keeping the fee. So who is lying?? We all know it's the shady business that actually keeps the fee and that is Shopify. I hate dishonest business practices like this. Just shows how scummy some companies are.

Leslie_Wiles
Tourist
8 0 27

Canceling an order (either at the request of the customer or because there isn't inventory to fill the order) and Issuing Refunds for "order issues" are entirely different circumstances and should be treated as such. Shopify only just started taking fees from vendors since the pandemic, and most likely due to the amount of orders being cancelled because of supply issues. No other processing company charges fees for either of the Cancel Order reasons mentioned above. This is a money grab by Shopify in a pandemic and constitutes price gouging and fraud. I was never notified via email or other, of any new Shopify Processing Procedures. Nor have I given permission for any money to be taken from my bank account for processing fees on canceled orders. Why would a vendor pay fees when they don't receive a dime from a customer canceled sale???? For "Inventory Unavailable Cancelations", A vendor is already losing a sale, and now you expect them to pay a processing fee for money they never received?  Shopify support is lying....no other processor does this!

Leslie_Wiles
Tourist
8 0 27

SHAY: Shopify staff's answer that the store owner deduct these fees from their customer refund is also BOGUS. How many times have you ever taken a shirt back to Macy's, and they refunded you the price you payed for the item, plus tax minus processing fees???? NEVER. What about Walgreens, your grocer, Nike???? No one does this. EVER. This is a joke. Shay, in your reply above to Robert you stated " While this may not be an industry standard for in-person sales, it is for online payment processing."

This is false... there is no difference between the two sales if a credit card is used for payment. Neither Etsy nor Amazon make their store owners pay fees on cancelations. ITS A " NEW" SHADY BUSINESS PRACTICE BY SHOPIFY (as staff said "put in place beginning of 2020" aka: Start of Pandemic) and IMO a way to capitalize on the supply chain issues the pandemic would create. 

Travnape
Explorer
49 0 27

Just to let folks know. Sadly this is normal practice. You are technically being credited back the credit card transaction fees when you cancel an order, but you are being charged them again on the refund transaction as an interchange fee from the banking system. This is essentially a policy laid down by the banking institutions which the credit card companies utilize and unless the merchant gateway processing the transactions has some kind of special contract agreement with Visa/Mastercard/etc, those fees are charged right from the source. As much as I hate Shopify and their horrific mismanagement of many things and their absolutely laughable support, I will attest that it's not actually them pocketing the fees in this instance. If you do a little more research on Google, you will find several articles relating to this (which are not Shopify sourced), which do lay out this practice in detail.

 

It is a completely rotten practice to keep fees on a transaction that essentially didn't happen, which is shielded by a paper thin excuse of "paying for the infrastructure" which is BS. It's just another banking system cash grab, just like charging $15 for charge backs. The only solution is to band together and bug the hell out of our government reps to revise these systems. Banks like to claim that they are "partners in our business" but as soon as it comes down to it, they run away with the bag at the first sign of loss. The banks should be required to actually act as partners and shoulder the same setbacks. 

ByeShop-ify
Excursionist
19 0 22

Quote Shay: You also have the ability to refund a customer less processing fees at any time. When processing a refund you can change the refund amount to reflect that before processing.

 

Ummm, So we have a fraudulent transaction, which we cancel... (Sometimes within seconds of them coming in).. And you expect us to deduct refund fees from this transaction, to a person whom is using a fake credit card normally.. So an innocent person, gets not the full amount back, of which they will then dispute with their bank. meaning more work and more loss for us....  Sorry you answer is massively flawed! and almost hypocritical!! 

 

Ugh.. Shopify, still making me feel scammed. 

Leslie_Wiles
Tourist
8 0 27

@ByeShop-ify  Because they are scamming you! Charging the fees to the client will no doubt end in chargeback or dispute on the customer's behalf, which will cost you more money in the long run.. This is in no way an industry standard. Credit card processing companies make millions, billions, even trillions a year in fees. Refunding canceled orders is a cost of doing business for them. Not something passed on to Small Business Owners that pay fees for every sale already! Shopify has its own payment gateway...and its corrupt af.

Mayka98370
Shopify Partner
4 0 0

I had no idea that even these when they flag do not get refunds? Good to know! Thanks for sharing. 

kirbman
Visitor
1 0 1

I got my first order and guess what....Fraud.  So, I cancelled the order of course.  Two days later I find out that I'm getting charged $6 for the cancellation.  What a crock of sh!t.  I have another site on BigCommerce with Stripe set up as payment processor.  I've never seen them charge for cancelling transcations.

Leslie_Wiles
Tourist
8 0 27
Because it isnt Stripe. Shopify Payments makes their own rules and acts as
their own processor. They might say they partnered with Stripe, but I think
Stripe just provided the processing tech. Your charges aren't actually ran
through Stripe. Shopify Payments is it's own entity and setting these fees
and charges as they see fit and/or for profit.
Julie_Sheldrick
Tourist
10 0 58
YOU ARE NOT READING MY COMPLAINT PROPERLY.

SEE ATTACHED.






Julie_Sheldrick
Tourist
10 0 58

YOU ARE NOT READING MY COMPLAINT PROPERLY

pemf1
Tourist
5 0 2

I was also charged a fee by Shopify on an order a customer cancelled, amounting to $18.

 

I believe we have a right to pass on this fee to the customer, right?  So when they ask for a refund, we refund the amount they paid, minus the fee Shopify will charge.

Robert48504
Tourist
5 0 54

Just imagine Amazon keeping a fee if you cancel an order or Walmart keeping a fee if you return something. Never gonna happen.... Besides never having the customer return to your Shopify site, if we tried to screw our customers for Shopify's theft, we would get hit with so many chargebacks the account would probably get closed.

Mayka98370
Shopify Partner
4 0 0

So this sounds like you have confirmed that Shopify indeed does not refund transaction fees for transactions that were canceled and refunded to customers. I had this issue as well and this must be addressed. Even a bank often refunds transactions fees if the order gets returned or canceled. Why would Shopify retain 100% of the transaction fee from a payout that got reversed / chargedback, when the request to cancel an order came from the customer? 

Julie_Sheldrick
Tourist
10 0 58

SHOPIFY ARE TAKING THE MERCHANT FEE - IMMEDIATELY - IT DOES NOT MATTER HOW QUICKLY YOU CANCEL AN ORDER - YOU DONT GET THE FEE BACK.

 

I LOSE BETWEEN £60-100 ON EACH OF MY CANCELLED ORDERS BECAUSE THEIR VALUE IS £1500-3000

 

SHOPIFY ARE STEALING MY MONEY

CAT18
Tourist
5 0 25

Client tried purchasing three times and all three were immediately cancelled, and marked cancelled on their orders. Meanwhile even after chatting with Shopify suppprt to ensure the client would not be charged and the funds would not be released to me, today they were and they’re taking 241 dollars in fees?!!?!!? Are they joking! Meanwhile I’m going in circles with support regarding this and how I chatted with them twice the very next day! Followed their instructions and was assured. What a scam 

Huck
Tourist
6 0 3

We're a Canadian small business, I just found out Shopify stopped to refund transaction fee on a cancelled order around Jun.2021, no any notice at all. It is not true, if customer paid with PayPal and they cancelled the order, PayPal will refund the transaction fee for sure

Huck
Tourist
6 0 3

PayPal never charges fee on refund amount, and Shopify start to charge on refund and cancelled orders since last March or April