Transaction Credits on Refunds Fees - After March 1, 2020, Shopify will no longer return this fee?!

[Newbie_Seller]

Dear Shopify Community and Experts,

Shopify has always been crediting back transaction fees if a store owner makes a full refund to a customer - same procedure with many or probably all other payment processors including the greedy Paypal!!

That said, all of a sudden today January 20th, 2020 - we are receiving a notification from shopify indicating that Shopify will no longer be returning the fees as of March 1st, 2020 (see image at the bottom of this message, i have also put the text version of the email just in case)......my understanding here means if you refund an order to a customer, shopify will still charge you a transaction fee!! 

Questions

1. Has anyone / everyone received this email notifying that there will be this so called "Update on refund policy"?

2. In this shopify email regarding this new upcoming change, Shopify has put a link to its called "Shopify Terms of Service" - https://www.shopify.com/legal/terms?utm_source=exacttarget&utm_medium=email&utm_campaign=support&utm...

no where there is a mention of transaction credit on refunds specific.....everything is general about "transaction fees"

3. Isn't this stealing in day light? i mean how would shopify start charging transaction fees to store owners if nothing is sold (fully refunded to a customer)? There are many legitimate reasons why refunds are being made but the most common ones is "high risk transactions" (we have tools to analyze transactions and sometimes you see a bunch of things that do not make sense in a customer order.....history of fraud, billing address does not match credit card address e.t.c)

Would appreciate shopify experts and community to provide more insights on this......we do feel this is some kind of an attempt for shopify to get store owners to use their shopify payments processor (which we are not using - we are on paypal), and probably message is sent to specific stores not everyone else!! We do a lot of refunds because we have been attacked by scammers lately very intensively, therefore we are very keen on our orders!!

Text version of email here:

Dear XXXXXX,

We are making changes that will go into effect after March 1, 2020, including a change to our current Shopify Terms of Service that may affect you.

Upcoming changes:

• We discovered a mistake we made with your account: When you process a refund, we have been paying you back your original transaction fee despite our terms of service saying that this won’t happen. We won’t be asking for any money back and unlike many payment processors, we won’t charge an additional fee to process a refund. After March 1, 2020, we will no longer return this fee. This is consistent with our existing Shopify Terms of Service that you agreed to already.

If you have any questions about these changes, please don’t hesitate to get in touch with us.

Thanks,
Shopify Support

© Shopify, 150 Elgin Street, Ottawa ON, K2P 1L4 Shopify.MailID:1-1.5e25cf18.6433354.5936ff5ef8b88ec7fd1b41bfe178b0d5

[Chickpick]

No, no, no. This is utter greed and nothing but theft. I’m so sick of it all. What really irks me was the way they made it seem as if I owe them money but they are going to let it slide. Oh, you “discovered” a mistake on EVERYONES account!?!? Am I supposed to thank you for now stealing money from me when a customer changes their mind. This is ridiculous and the final straw. Time to hire someone and build my own website over on Wordpress I guess. I have been thinking of it anyway. Shutting down my store for a ridiculous middle of the month shipping charge that I was giving no warning of was strike one. Strike two was the fact It was shut down on Christmas Eve so I couldn’t even add funds to my account To pay it and I had a Fraudulent chargeback For $500 due on December 26th! My bill wasn’t due for 4 days. Why not charge me then? No store credit feature, no multiple discounts. All things that are common place in a retail business and should be available on an e-commerce platform without paying extra. Shopify has gone the way of the rest, they are now too big for their britches. Big mistake on their part I believe. There are other options. They don’t have the death grip they believe they do. Sad.

[TylerKing]

I received the same email. We use Shopify in our Brick and mortar (over 95% of our business), and i have been pushing some of our retail friends who would represent 100's of thousands of dollars in processing a year from their legacy POS systems to Shopify because in the past Shopify didn't nickel and dime you, but with them headed down this road I can't recommend it anymore. here was my email response, I will also be calling to voice my displeasure.

Good afternoon,

      I am very disappointed in this decision by your team. One of the main reasons we chose Shopify payments and the Shopify ecosystem is that I felt that it did not nickel and dime you to death, the elimination of the fee return I believe is a step down that path. Let me explain why if things worked perfectly I would have no problem with this being the case; but with system issues in your POS app this would be an unfair practice:

I will preface this with an example and explanation; we have, and a common practice is to have s a 30 day same method of payment return policy. Let's say a customer purchases an item for $24.99 takes it home and tries it on and decides it doesn't fit. They bring that item back and exchange it for the correct size, which is done through the exchange / return button on the POS app. Well this customer then (within the return window) decides that this just isn't the right item for them, so they come back to outright return it. They are still within the 30 day return window for method of payment return, but because there is no payment pass through to the original ticket all I can give them is an exchange credit. I WILL NOT HAVE A HAPPY CUSTOMER. Yes; you can go to the admin, return the item then manually return it on the original ticket to their card, however this is something that is only reserved for our managers and admin to do, not assistant managers and normal employees, it often involves calling a manager and takes time where the customer is sitting there waiting because you are unable to resolve their return in front of them. Because of this, and a way to get around it; our SOP has been to fully return any item that comes back (even on exchanges) then re-ring the order; and because we were refunded the processing fee it was no big deal to do so, and kept our customers happy and our tickets more organized. Now if we do this we will basically be double charged the processing fee because the POS app is unable to provide the service our customers expect. 

The next example of this (and it happens often) is that someone forgot or missed putting a discount on a customer's order until after the transaction is complete. Previously it was no big deal, we would simply return everything and re-do the sale with the correct discount because the fees would be refunded. The way it would have to be done in the future would be calling an admin to go and manually recalculate the discount then apply it as a refund for only that amount back to the card, again providing sub par customer service while the customer is waiting. All said, these changes will cost us an additional $2,000 / year, and create a much worse experience for our customers; again if the POS app would allow for easy modifications with issues like this when they arise I wouldn't have a problem with it, bur I feel like this is nickel and diming at the expense of quality service when we are already paying over $40,000 / year in processing fees with you. To say I am disappointed doesn't begin to describe my feelings.

[sjt]

Jumping in here. I completely agree. This is insane.  Very unhappy and sent email to customer support at Shopify.  She explained how much it hypothetically would have cost me in 2019.  It more than triples my Shopify cost overnight.  We have an expensive product and 30% returns which is normal/low for my niche.  

[Superdad]

It is time to start posting elsewhere about this so that they are shamed into reconsidering this terrible policy.  I just made a post on one of their Facebook pages. 

We have to make a LOT of noise about this or we will just be ignored.

I recall that there is a web site that follows news and does comparisons regarding  e-commerce platforms. We should look for that and find someone there to write a story about this.

[SCCA]

I'm jumping in here to agree that this is not acceptable policy!

Especially at this time - Covid-19 health crisis with so many cancellations and refunds that are beyond our control. We are a small nonprofit and are loosing a lot of funds through all sources, and now this!! We were contacted by one of our supporters about this situation and he said this is very against best practice in the overall field of credit processing. 

NOT COOL, SHOPIFY! At least for the current national emergency, you should reinstate the previous policy and return the processing fee for refunds. 

[RDR]

We changed to Authorize.net and BAMS for the processor.  They DO give the merchant back the processing fees.  I highly recommend changing ASAP. My rep there is Ashley, and she was available personally 24/7 through the process, and got us changed over before the deadline.  Ashleym@bams.com  if anyone is interested. 

[NotCarl]

Problem with this (that they might not have warned you on) is you now pay an additional 2% to Shopify for every single transaction on top of whatever Authorize charges. They tax you no matter what you do now.

I hate to say it but this won't be the first "subtle" step in this direction. Little-by-little

[ladymoonfire]

I'm jumping in here to say I found out about this no fee return on refunds just yesterday via a transaction and I am PISSED.

I had a potential scammer contact me for a $320 order. She claimed she paid and sent screenshots of a bank transfer and tried to say Shopify Payments had an issue. I even backed Shopify Payments saying I've never had a problem with them. A couple days later, she actually DID pay via Shopify Payments and the order went through. However, she then messaged me to say that it was a "double" payment, and for me to refund the "extra" $320 when the money came in. At this point I decided not to move forward with the transaction and told her I would cancel the order and do a full refund, which I did. Then a Shopify email comes in telling me I'm getting charged $10 for the refund! Talk about adding insult to injury! 

I've disabled Shopify Payments and am looking to move off Shopify now. It's been a good run with Shopify, but all good things must come to an end.

[Nancy_Neville]

So you know that now Shopify is charging a 1% or 2% per transaction because you are using a different merchant service?

[dpd1]

They sent out an email today saying they’re… "committing over 200 million dollars to help our merchants this year.”’

I don’t know what that means. But yeah, they can keep the 200 million and just remove this fee thing. I’d be fine with that. If Stripe (the guys doing Shopify Payments) are the ones forcing this, then they should threaten to leave them and get somebody else. I mean, this is Shopify… They’re huge. Throw some weight around.

[TylerKing]

So from my initial post I was given the canned line from Shopify support, I then cited the exact places in Shopify's TOS for payments where it directly contradicted their "interpretation" where it refers directly to net fees, indicating that fees are returned from customer returns, and I addressed the section they quoted as justification. That section only addresses fee forfeiture in relation to bank or customer initiated chargebacks, and does not refer to returns. They are in fact violating their own TOS by doing this. 

[megandeleeuw]

Has anyone received a response on this? We are a small nonprofit that has requested a refund of these fees for an event that was cancelled due to COVID. I'm feeling like we're not valued as a new customer at the moment if Shopify isn't willing to help their customers in this way in a time of need.

[Yaada]

As far as a response from my post here, nope I haven't. Other than their
disconnected, unappreciated email response that I first submitted
discussing my disappointment with this policy.

[SCCA]

I'm also a small nonprofit and we lost hundreds of dollars with this
policy.
I got no positive or even sympathetic response from Shopify. We are
currently investigating other payment processing options, but,
unfortunately, most of them are as terrible and lacking in customer service
for "the little guys"

[SCCA]

I went a little post happy on social media about this issue and have been contacted by Shopify support. They are listening to me, but dragging me around without actually saying anything. I was asked to submit a formal support ticket and told "I do not have more information at this point, but if you send me the ticket number I will be able to follow up with you by email once I know more."

I'll post here when I find out more! IF!

[dbzexchange]

I just had my instance of this.  Contacted them and got the same results.  I am one more person trying to help the cause at least.  I told them how we try to prevent theft by refunding fraudulent orders, just to turn around and be robbed by Shopify.  I suggested a flat fee would be more fair. 

They suggested switching to manual payment capture, I did that for now.  Does anyone know of any precautions I should take while using the "manual" setting?  or is it just as easy as I stay on top and accept payment promptly?

Any advice appreciated!

Thanks

[Jann_Mestel]

I was told that even if I haven't "captured" the order (if it's just
authorized) I still will be charged the fee if I cancel the order.
If this information I was given was incorrect, that would be a good thing
because then we could simply manually capture the orders before shipping.

I had one customer keep ordering over and over again because I kept
cancelling his order! Ugh

[dbzexchange]

So, now we have conflicting information. 

Has anyone experienced issuing a refund before payment capture?  Was there a fee or not?

Wow, that is awful.  If I experience this instance I will update on here and let you know.

[ampman]

There is no way you would be charged a refund fee before capturing. And if
that were somehow the case, i'd just take non-captured orders and let them
sit in limbo forever.

[Jann_Mestel]

Good point.

[1bhkinteriors]

Hi, may I ask whether you're using Shopify payments? I operate out of India where Shopify Payments is not applicable and I didn't get this email. 

[SCCC20]

I just realized this as well! What is the point of Charging a fee receiving an order and now charging a fee when refunding. That’s not helpful to any of our businesses. I must say I’m very disappointed.

[charovetchy]

This is completely Shocking! 

I got an order and within less than an hour I got an email from the customer saying they needed to cancel the order because it was a mistake. For that Shopify charged me. It is very worrying to know that your website is open for anyone to order something, cancel within minutes and for this you lose money. 

Open Business for Losing money  :0 

[dbzexchange]

I ended up switching to manual payment capture to play it safe.  I have not had to deal with any refunds since to see if there is somehow any charge involved still though.  

[TylerKing]

So I wanted to give and update of my experience. I got the canned lined at first from a guru about how they had basically been doing us all a favor this whole time and they cited a section of the TOS, this was my response (to which I NEVER got an answer back),

First thank you for the quick response. I understand that our return rate was only 3.5% last year, however at our scale this is $1500-$2000 a year in lost money. The force multiplier for this is that the money we are losing is not gross profit but net profit at the end of the day. In reality this is like losing $5000 in sales for the year as it is money we have already worked hard to make. This is also a matter of principle.

     The section of the TOS quoted as being the rationale for this fee is expressly referring to liability. The section overview sentence specifies this is referring to: “ Reversals, Chargebacks, Claims, fines, fees, penalties and other liability arising out of or relating to your breach of this Agreement, and/or your use of the Service. ” 

By the section’s own description the forfeiture of paid fees Only relates to Reversals, Chargebacks, and other liabilities if I had breached the TOS. Under the definitions in the TOS Chargebacks and other are described as “  "Chargeback" means a request that a buyer customer files directly with his or her card company or card issuing bank to invalidate a processed payment. "Claim" means a challenge to a payment that you or a buyer customer files directly with Shopify. "Reversal" means Shopify reverses the settlement of funds from a processed card transaction that you received because (a) the card transaction is invalidated by the card issuer, (b) the settlement funds were sent to you in error by (i) Shopify, Stripe or Wells Fargo; (ii) the processors, suppliers or licensors of Shopify, Stripe or Wells Fargo; or (iii) any of the respective affiliates, agents, directors and employees of any of the entities listed in (i) or (ii) above, (c) the sender of the payment did not have authorization to send the payment (for example: the buyer used a card that did not belong to the buyer), (d) you received the payment for activities that violated this Agreement or any other Shopify or Stripe agreement, or (e) we decided a Claim against you.” 

     These are the situations described where I would be responsible for the fees. A normal refund is described under none of these situations. This is not in the material spirit of the TOS as under C.3 there is a direct reference to “net fees” - “ Once your bank account information has been reviewed, Stripe, on behalf of Shopify, will initiate transfer of settlement funds (net Fees, chargebacks, and other funds owed to us for any reason) in accordance with the Payout Schedule, the terms of which will be made available to you when you login to our website using your Service Account. ”

      With the language of net fees it makes it clear that return fees are to be returned. This entire interpretation feels like a money grab dreamt up by a lawyer and an accountant to make more money without additional growth. We are already paying over $40,000 a year in transaction fees to Shopify; you don’t need to nickel and dime us more. I worked on Union contracts for over 6 years in a previous career and I would describe this newfound understanding of the TOS dubious at best and what the SEC would describe as predatory at worst. I have been working with one of our retail friends who were looking to switch to Shopify and would have represented over $100,000 in revenue to you through fees and processing. One of the things I said in support of Shopify was that you didn’t nickel and dime your customers. I’m afraid I can no longer make that recommendation and will tell them to consider other platforms as I am unhappy with the direction this indicated Shopify is heading.

-Tyler

[charovetchy]

thanks for sharing this is very useful information! 

Cannot believe the big retailers are gonna ride with this, specially in the current retail climate where most businesses are going to suffer. 

Just spoke to my friends who have a massive catalog and sell high volumes thus get a high return/cancellation rate. It's a pain for them to move the store but they are looking at options now :0  

[casey22]

@shopify As a new store, we have received only 2  orders which are not personally contacted to the store owners in some way, both of these order have been fraudulent orders! With $199 order values Shopify is able to flag these as "High risk of fraud detected" but still takes the order and a $7.07 processing fee in the process. There is no way for us to set Shopify to not accept payment for orders it flags as "High risk of fraud detected" and yet the strong advice issued by Shopify support online is to cancel and refund the order to prevent losses from future chargebacks. However, in doing so, we must refund the order in full amount to the card used at checkout via Shopify Pay (value $199 including the payment processing fee of $7.07) and Shopify profits in the process because it does not refund the payment processing fees. Whats to say Shopify doesn't hire people in the Philippines to place fraudulent orders for their own profit?

[Jann_Mestel]

I spoke with another Shopify tech and found out that if an order is
authorized but not captured, and it gets "cancelled", there are no Shopify
fees charged to the seller because we're simply cancelling an authorization.
I did this recently with an order and after cancelling it, I also "voided"
the transaction.

If the order has already been "captured", that's when the fees get charged,
even if you refund.

Since I was given contrary information at an earlier date, I asked the tech
to double check it and he did (with upper management.)

So there's a way to avoid the problem you have: set your shop to NOT
automatically "capture" orders. Manually "capture" them.

[Christine80202]

I will cancel my 3 accounts with Shopify if this policy continue. This is not acceptable!

[Nancy_Neville]

I’m thinking the same, who will you go to? I have poured tons of money into each of my Shopify websites, now isn’t the time to change as the funds are not available. ☹

[megandeleeuw]

I think we need to make sure the media knows that shopify is actively hurting small businesses by continuing to not refund credit card fees given the COVID-19 situation...especially for small businesses or nonprofits under a certain gross amount. 

If anyone is interested, I could draft a press release. Email me to tell me your story and I can start gathering info: megan.deleeuw@macd.org. We are a local government entity but function as a small nonprofit since our funding comes from an annual tree sale. I think we could get some press from a list of small businesses and nonprofits hurting from Shopify's decision and refusal to help.

Alternatively, what a great marketing plug for them if they were to refund and retract their March 1st change and delay it until 2021 to help small business!

[Katchen_Gerig]

I think it is more of a Stripe issue and even more so, a credit card charge
issue. Shopify uses Stripe and Stripe just started not refunding Stripe
fee on refunds. Here is the explanation from Stripe...

*Stripe info on their site about refunds*

*There are no fees to refund a payment, but Stripe’s fees on the original
payment will not be returned in case of a refund.*

*A large portion of the underlying cost of payment processing is driven by
fees assessed by banks and payment networks (like Visa and Mastercard).
These networks set rules about which fees apply for refunded payments, and
in many cases banks and card networks keep the entire upfront cost of a
refunded transaction. For some regions and payment types, refunded payments
also incur additional fees.*

*We aim to make our pricing simple and transparent, and our standard fees
include access to a variety of features like fraud protection, reporting,
and other tools for managing your payments. To address these underlying
payment processing costs and continue providing these services as part of
our standard pricing, Stripe does not return our fees when a payment is
refunded.*

[megandeleeuw]

This clarification is good and necessary however, I would still put the responsibility on Shopify.

As a customer using Shopify, I see under payment providers a list of credit cards or payment options I can select to allow my customers to use or not. I do not see Stripe or any breakdown of details beyond the range that each payment provider uses. More transparency is definitely needed. 

For the short term though, Shopify is the business that I am directly interacting with as a customer and I have no contact with Stripe so doesn't make sense for me to directly target them. 

[1bhkinteriors]

As far as I can see there are two different fees here - the credit card or
payment gateway fees, and Shopify fees. The issue being discussed is the
Shopify fees so Stripe's policies are not relevant.

[JewelersRow]

I am just finding out about this change this week, and I am severely disappointed. We use Shopify to process e-com orders which are infrequent but individually significant. We already pay a ton for Shopify Plus yet now we'll incur thousands in extra fees per year for refunds. 

What's really disgusting is the way they framed this as 'their mistake' and that they should have been doing this all along -- that is complete garbage. I have been emailing with Support over the course of two days. They provide the same canned repose and point me to the Indemnification and Chargeback sections of their TOS, which happens to have a generic sentence at the end about not refunding fees, however, the preceding paragraphs (and topic as a whole) are all related Claims resulting from Chargebacks and disputes, not refunds issued through the normal course of business. 

I plan to file a claim with the FTC, that's probably the best thing any of us can do. I think the fact that this isn't actually stated in the terms, yet they are representing that it is, is false and misleading.