Do shop owners have to pay credit card processing and currency conversion fees for refunded orders?
If so, that came as a shock to me. A customer had purchased a high value item but I had to process a refund to him immediately to make a change to the order. A few weeks on, I see Shopify has charged my bank account a ShopPay credit card processing and currency conversion fee. That hurt!
Long story short, Shopify says they do not refund âShopify Payments fee and Currency Conversion feeâ on refunded orders, regardless if purchase was a mistake by the customer and refund processed within minutes.
This was regarding a refund I processed for a customer on October 18th. My customer wanted to use ShopPay âinstallmentsâ to purchase. However, he accidentally paid using ShopPay âwithout installmentsâ. As a result, I processed a full refund for the customer within minutes. Unfortunately, today $355.45 was withdrawn from my bank for Shopify Payments fee and Currency Conversion Fee. The customer made the mistake. As a seller, I feel I shouldnât have to pay the fees but Shopify says I need to foot the bill. I think that is ridiculous as the refund was processed within minutes. Iâm sure there are times when a customer purchases an incorrect item, enters a wrong quantity or involved with an unintended transaction (perhaps a kid pressed BUY). Do store owners have to foot the Payment Fee & Currency Conversion fee for refunds in such cases also? If it was a small amount, I would let it slip but when youâre selling higher value items, these fees are no joke.
I was wondering if any of you have been in a similar situation and was able to get the fee refunded by Shopify? Any advice? I reached out to Shopify support but the person just sends me an image âCredit card transaction fees arenât returned to you when you issue a refundâ. Please advice me the steps (if any) I need to take to get this fee refunded back to me. My customer still intends to make the item purchase. Iâm not paying Shopify twice for fees to sell the same item to a customer. I would rather list the item on a platform like Etsy and sell it there if so. Thank you.
Update: Does Shopify work with different rules regarding refunds and payment processing fees? Upon further investigation into my sales, I realized on 11 August 2022, I had to process a refund to a customer within hours due to changes required on listing price/taxes. On that refund, I wasnât charged any payment processing fees. It wasnât âShopPayâ payment however. Is this payment processing fee not refundable only when ShopPay is used? I have disabled ShopPay from my website today as it seems payment processing fees arenât refunded only when ShopPay is used.
Thank you for sharing your experience and feedback about Shopify Payments. I understand that the transaction fees can be especially impactful with high value orders.
Policies will vary between payment providers. Some charge a fee to process a refund in addition to the standard transaction fees. Costs are incurred to process refunds, so Shopify Payments does not reimburse the original transaction fees when a refund is processed. However, no additional fee is charged to process a refund. This is covered in the Shopify Payments Terms of Service (section C5, D5, and D6).
To clarify, this isnât specific only to Shop Pay, but Shopify Payments as a whole.
Hi Sophia,
Thank you for your reply. You mention it isnât specific to ShopPay. Please can you tell me exactly why I wasnât charged a payment processing fee for my order refund on 11th August 2022 but I was charged a payment processing fee for my order refund on 18th October? The only difference between the two orders is that for my 18th October order, my customer used ShopPay, while for 11th August 2022, it was not ShopPay as I had not activated ShopPay back then. I would think there would be more advantages for sellers using Shopifyâs ShopPay payment processing system. It seems like that is not the case. I have disabled ShopPay from my store entirely because of this experience. Even a platform like Etsy does not charge me payment processing fees for refunds. My order refund was for a change I had to make for the customer who still has the intention of buying the item. I will just have to list my item on Etsy or elsewhere as I refuse to pay double fee totaling $700+ just to process a payment for an item.
All credit card transactions would incur a processing fee that is not reimbursed once a refund is processed. Was the refund on August 11th processed with Shopify Payments, or with a third-party payment provider?
Iâm wondering if the October 18th transaction included a currency conversion fee. Iâm not able to access your admin from this public space, but if you contact our team again via the Shopify Help Center, we can review the order timelines and payouts with you to clarify exactly which charges applied and why.
So, my question to this is, how can we as shop owners push the credit card transaction fee onto the customer? I feel this would absolve the whole issue. Increasing the price of an item to âcoverâ it does not necessarily negate the fee, it only lessens the blow. That, or what is the legality of including a statement in my refunds/return policy regarding credit card fee transaction fees withholdings in the event of refunds? For example, the customer gets a refund minus the transaction fee I am to pay. Where I find this getting even worse is with charge backs..
Hi, @Ray32 .
Thank you for sharing this suggestion. Iâm not sure whether it is possible to transfer the transaction fees to the customer at checkout, but I am happy to submit a feature request to our developers on your behalf.
I canât offer legal advice, so you might benefit from seeking legal consultation in your area to determine whether your business is allowed to withhold the transaction fees in the event of refunds. Depending on where youâre located, your government might also have this information on their website.
Hey, @Sophia
Thank you for responding! Yes, absolutely, please push this request onto the developers. Myself and so many other shop owners are looking to have this feature implemented. From my research there are only 4 states that havenât made this completely legal (not legal advice).
Understood on the additional legal question I had.
Thanks for following up, @Ray32 ! I just wanted to confirm that the feature request has been submitted.
"Costs are incurred to process refunds, "
What are these costs? AWS?
Because to me it seems like the purpose of the fees in the first place is to cover the possibility of a return or a chargeback. Isnât that it? Youâre insured against us not being able to pay out a chargeback? This is how it has been presented to me.
Anyways, thatâs also weird, because shopify decides if and when to remit me the money in the first place.
I have just discovered a 1% hole in my business and Iâm not happy about it. âJust raise your pricesâ⌠it doesnât matter itâll still be a 1% hole in my business. Youâll just get even more in fees.
Not happy.
From a small business perspective, i feel this is completely unfair. Particularly for those retailers like myself who sell high value items and which the customer has a 14 day distance selling rights to cancel or return their item if they change their minds and we have to foot the bill. This is impacting our bottom line considerably as more and more customers are doing some more frequently.
One very disgruntled Shopify shop owner!
Was this feature ever implemented? We sell high value items, and as a small business itâs absurd to think we can suck up $50-100 if a customer wants a refund. We are moving from WooCommerce and we were able to push the fee to the customer thereâŚ
This is bad business practice. As a new user of Shopify, I am extremely disappointed in this policy and may look for alternatives to using Shopify. As a shareholder in the company, I also feel this will leave a bad taste in your customerâs mouthes and may be penny-wise and pound-foolish in the long run. Rethink this, please!
