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

Newbie_Seller
Tourist
3 0 25

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!!

 

 

 

Shopify-update-on-refund-fees.jpg

 

 

 

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

 

Replies 142 (142)
ASUCrystal
Tourist
7 0 15

I got the same email 😞 I came on the Shopify forums just to see if everyone else got the same email. I totally agree, this is ridiculous.

NJR
New Member
1 0 13

Most online businesses that sell products have a return rate of between 25% and 35%.  I see absolutely no reason why Shopify should keep the commission on sales that turn into refunds.  Refunds are just part of the online retail landscape.  Why should the individual merchants foot the bill for the these refunds?  Merchants already bear the cost of the outward / return / 2nd outward shipping on returned items.  To have to pay Shopify commission more than once on a the sale of a product that's returned is ludicrous.  It's greedy and will inevitably put more online merchants out of business.  

Shopify, it's hard enough out there without you guys double dipping.  You need to rethink this as it's going to have a catastrophic effect on your community of merchants and then ultimately your own bottom line.  

 

This action is unjustifiable.  Please reconsider. 

 

 

Superdad
Tourist
7 0 24

I agree that this is outrageous!

People place orders on my store and sometimes decide to cancel before the item is shipped. My average product price is $600, so the lost fees when someone cancels under this new policy will be considerable.

 

The other thing that they are doing which sucks is adding another 1% to all international transactions.  Half of my large business is international. Since PayPal has been at 4.4% for several years, I have been pushing clients to pay with credit card via Shopify Payments. Now the delta (3.9% vs. 4.4%) for international is much smaller.

Newbie_Seller
Tourist
3 0 25

Glad to know other store owners got this notification also....at least part one of my problem is answered (as we felt like our store is being targeted).

 

That said, i do think if all store owners have received this notification ...we need to boycott this!! IT DOES NOT MAKE ANY BUSINESS SENSE, THERE ARE SO MANY LEGITIMATE REASONS STORE OWNERS HAVE TO REFUND ORDERS!! There are ton of high risky transactions daily, we cannot sell to everyone who make purchases on our store!

 

Hopefully someone official from shopify will jump on this thread, otherwise i am hoping it catches enough fire to get this update reverted....otherwise will have to pump this on social media channels until Shopify wakes up!

Superdad
Tourist
7 0 24

I just got off the phone with a Shopify rep.  I sure gave her an earful.  She said she would pass this along to management. This new policy regarding refunds will cost me several thousand dollars per year.

I would move to another CC payment provider, but then Shopify charges 2% on every PayPal purchase.  So they got me either way.

 

The crazy thing is, Stripe is the CC merchant processor that Shopify works through (its right there at the top of the Terms of Service page), yet Stripe does not have this crazy new keep-the-fee policy for refunds.

 

I do not think posting here in the forum is going to be enough. I think a lot of people should call Shopify Support and voice their displeasure with the policy. That stands a (small) chance of getting them to reconsider.

Newbie_Seller
Tourist
3 0 25

Definitely....posting here is not going to do much, my hope was to first verify if a lot of people have got this notification. Additionally i just wanted to know what their view is (so far it seems no one is definitely receiving this update positively as it is going to kill everyone's business).

 

From here, a ton of emails and calls to shopify support.....PLUS splashing this misconduct on social media channels will be the route to take, until Shopify gets a pain from their sales revenue, then they will realize the important of being fair.

 

This is just illegal - purely, not matter how they can put it that we have accepted their terms of service (THERE IS NOTHING IN THE TERMS OF SERVICE THAT SPEAKS SPECIFICALLY TO THE REFUND FEES / CREDITS OR THIS SO CALLED UPDATE STARTING MARCH 1ST)

 

I really hope all existing store front owners we will unite on this matter!! we love shopify platform for so many reasons but this update is definitely not something that we can live with!

Jann_Mestel
Excursionist
22 0 12

When it says, “we have been paying you back your original Shopify Payments fee” I assume that is referring to the 2.9% and NOT the .30 cents per transaction. So does this mean when I have refunded someone fully, I got back the 2.9%? 

 

So after March 1st, if someone spends $3,000 and then cancels the order, will I be out the 2.9%? 

 

What if I haven’t captured the order, if it’s just authorized?  And then it gets cancelled before capture?  So then there’s no actual refund involved-it’s just cancelling an authorization?  Is there still a fee involved there?

 

I recently had a customer order $6,200 worth of items in two orders.  Days later (after she received the items) she called and explained she had a "mental problem" brought on by a new medication and wanted to return the items.  In this case, would I be out the 2.9% of the $6,200?  ($179.80)  

 

I wonder if the credit card companies will allow us to charge a 3% fee on all cancelled orders (so as to cover that fee)....  

 

Thanks, 

Jann 

mgarland
Tourist
5 0 18

Yeah, so I just clarified this with Shopify. This means that you will be losing BOTH the 2.9% transaction fee AND the .30 cents per transaction. This will cover any/all transactions where the credit card has actually been charged. Their excuse is that these fees cover the costs of processing refunds.

Absolute BS and a money grab. Really disappointing to see Shopify follow PayPal's footsteps on this.

mgarland
Tourist
5 0 18

This is a HUGE issue that Shopify is trying to spin as an insignificant change. They are referencing their Terms of Service (Article 13 Section 9 of the Shopify Terms of Service) where is says that Shopify issues no refunds for fees. In the past, this was really a reference to subscription fees, app fees, chargeback fees etc. Now they are expanding that broad statement and saying it covers transaction fees for refunds now. They are trying to spin it like they've always had this policy and are only now choosing to enforce it. And furthermore, trying to say, "you should thank us- we won't retroactively charge you for any of the fees we refunded you in the past". Uh... thanks?

 

This is going to cost my business (and many others) thousands of dollars each year. We all know it doesn't cost much money to return funds back to a customer's credit card, so shopify will be majorly profiting on this move. Almost 3% of the full transaction, just to move digitally move the money back onto the original payment method? For larger orders in the thousands of dollars, Shopify will be keeping hundreds of dollars to cover the costs of this simple task.

 

I asked the customer service rep what I can do as a small business owner. He was vague, but claimed that these fees are charged by the issuing bank of the customer. He said some of these banks will issue refunds of transaction fees and others won't. I asked if Shopify would automatically refund me in the cases where the issuing bank did refund the transaction fee. He said he wasn't sure, but that as the business owner I would need to contact the customer  issuing bank on every single refund. This would require contacting the customer, having them provide the contact info for the bank handling their credit card, and then me calling their bank and asking if they would kindly refund the transaction fee. Are you kidding me? We have hundreds if not thousands of refunds throughout the year, I would have to hire a new employee to handle these phone calls....

 

I think this is a clear greedy move by Shopify and they are hoping no one will notice. We need to protest quickly and loudly to try and get this decision reversed.

 

I am currently looking at other options for payment processors as I truly feel this is an unethical position by Shopify.

Superdad
Tourist
7 0 24

And the 1% bump for all international transactions is not welcome either!

Had an overseas customer cancel a $3K order last week (decided to buy from our Hong Kong dealer who had stock). Under the new Shopify policy such a cancellation would cost me $117.

 

To my knowledge, no other credit card processor has such a policy with regards to non-return of "discount fees."  It is time to rise up and publicly shame Shopify until they relent.  My store is $600K~$800K per year--with about half PayPal and half through Shopify cc payments, so I pay $9K~$12K/year in CC fees to Shopify. That is not small change!

ampman
Excursionist
13 0 16

We had been planning to try to move more transactions off of PayPal to Shopify Payments, but now there's no reason to try. Unfortunately it looks like this is the new normal, and you have a few things to consider.

 

1) Raise your prices.

2) Charge a restocking fee, and deduct shipping costs from returns. We had to go this route. 

3) If you have free 2-day or free overnight shipping, give people the option to choose free ground shipping instead. Make sure they know they'll be on the hook for your shipping costs if they do make a return.

4) Renegotiate your shipping rates.

5) Wait as long as you can before capturing payments.

6) Get a time machine and buy SHOP stock.

7) Cut your wages and benefits. Ever wonder why retail and warehouse workers at the bottom never catch a break?

 

Chickpick
Tourist
9 0 4
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
Tourist
7 0 29

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
New Member
1 0 5

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
Tourist
7 0 24

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.

RDR
Tourist
10 0 2

Has anyone looked into alternate processors?  Part of the draw of Shopify Plus was the processing.  Now that they are stealing the commissions when we give 100% refund to the customer, we will be forced to leave.  With AOV at $500, we can't lose that money for absolutely nothing. 

dpd1
Explorer
60 0 37

I suggest everyone complain to the Federal Trade Commission. That's what I did. The fact that PayPal and Shopify both tried to do this at the same time, is ridiculous. I've heard a rumor that Stripe will start as well. Also... Their excuse of claiming that they themselves have to still incur fees on refunds, is false. Go look at the documentation that Visa and Mastercard provide. It states that interchange fees are in fact returned to processors on refunds. Even if their WAS a fee (there isn't), a company valued at over 50 billion dollars telling their customers they should suck it up and cover this, is a joke. I haven't called yet, but I told a "guru" that if this goes through, I will be changing hosts. Of course, all I got in return is placating nonsense, and a sales pitch for an app. What a shock. Hilariously it was an app for creating refund disclaimers. That was her big support she offered. Obviously the people they get to do support know nothing, otherwise they'd realize a disclaimer is meaningless, because the person will just do a charge-back and win it (like they almost always do no matter what). Apparently they've decided they'd rather have a constant rotation of failures to milk money from, then actually support successful businesses.

Superdad
Tourist
7 0 24

@dpd1: Where did you read that PayPal was also going to stop refunding fees when refunds are made?!  That would be earth-shattering and really f-ed-up!

 

Also, does anyone know if Shopify's new policy--set to begin March 1--applies to refunds on orders placed before March 1? Or is it only with regards to orders that get PLACED on or after March 1st?

I just finished shipping a several waves of orders of a new product ($640 per and we shipped almost 500 in the last 40 days) with a 30-day money-back guarantee, so I'd like to have some idea of our exposure to this new policy. I suppose I'll find out soon enough if someone who bought in February asks for a refund in March. 

 

I can't believe that this new robbery policy has not gotten any publicity on web sites which discuss e-commerce providers/engines.  I sent notice of it to a couple of sites a month ago, but crickets... 😞 

mgarland
Tourist
5 0 18

@Superdad wrote:

@dpd1: Where did you read that PayPal was also going to stop refunding fees when refunds are made?!  That would be earth-shattering and really f-ed-up!

@Superdad PayPal stopped refunding transaction fees in March 2019. Unfortunately, it doesn't appear Shopify is going to budge on this. After I wade through all the BS, they admit that this is basically the industry trend for payment processors and they want their piece of the pie.

 

Shopify continues to claim that some customer banks will refund the transaction fees. But Shopify will not automatically refund them. They said that we have to call each customer and obtain the issuing bank's contact information. Then we have to contact the bank and request a refund of the transactions fees. Only then will Shopify refund those fees.

 

I told the customer rep that I would have to hire a whole new office of people to deal with that type of (ridiculous) work. This is what it is folks. Shopify saw that PayPal kept these fees and didn't suffer for it, so they are going for it as well. The problem is, there isn't very many good options to switch over to- and Shopify knows it.

 

It's a shame and a huge knock on Shopify's image of being the business that empowers small business. Not the case anymore.