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

[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 

[charovetchy]

That is CRAZY!!!! feel super disappointed about this. 

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@Superdad wrote:

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.

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[Yaada]

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@charovetchy wrote:

That is CRAZY!!!! feel super disappointed about this. 

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@Superdad wrote:

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.

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I think the only way to combat this is through social media and having it go viral.  I still cant believe there are very few of us complaining about this when there are thousands upon thousands of Shopify stores that all should at least have encountered this despicable issue.

Having mentioned social media and going viral - since Im new to this who new thing with Shopify and getting traffic, etc... I really am not sure how I (or we) could get something to go viral.

I cant believe with this even being posted here on their very own website, that no moderator or admin from shopify has even responded to this, and acted upon it to look into finding a solution.

[Katchen_Gerig]

Stripe recently announced that they are keeping the 2.9 percent charge on refunds. Paypal also announced they are doing the same last year. So I think Shopify is doing this because of stripe.
You can find the announcement on the stripe website

[aj007]

Shopify's Gross Payments Volume (the amount of Gross Merchandise Volume processed through Shopify Payments) grew to $25.7 billion in fiscal 2019 - see:

https://investors.shopify.com/Investor-News-Details/2020/Shopify-Announces-Fourth-Quarter-and-Full-Y...

When you're that big, you can push back on Stripe/etc. and defend your million+ merchants... who in the end are why Shopify exists at all.

[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  

[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.

[Sarah808]

I hadn't written before because I didn' t know about this change. I didn't receive a notification. I just happened to notice the change while dooing my bookkeeping.

I just did live chat with support and this is what she wrote:

Girlie T: 

So here's some information we'd like to share about this.

Girlie T: 

According to our team, Shopify Payments incurs costs to process refunds. As part of our terms of service, Shopify is actually not obliged to refund these fees.

Girlie T: 

You can learn more information about this in sections C.5 and D.6 of the Shopify Payments Terms of Service.

Girlie T: 

I understand that credit card fees were refunded by Shopify before, however, due to the rising payment network costs, Shopify Payments will no longer reimburse credit card fees on Shopify Payments transactions when a merchant issues a return to a buyer. This also aligns with our existing Shopify Payments Terms of Service.

Girlie T: 

We won’t charge you an additional fee to process the refund like many payment processors, though. 🙂

This is what I responded:

Sarah Richardson: 

As other people have mentioned on your community forum, this is a BS canned response. How disappointing! First of all, I didn't receive notification of this change. Second, this is wrong on so many levels even if your policy states it. In particular in this climate of uncertainty with the pandemic. We had to close down our martial arts school. It's been a full month already and will probably be many more before we can reopen. We rely on our online sale to keep income coming in. We had to cancel the seminar in Seattle because of the Pandemic. So now, this cost us over $65 in fees for a seminar we didn't get paid for.

The other order is the same: The customer placed an order for a luxury item. The manufacturer informs us they no longer make the item. We issue a refund to customer but still pay close to $20 to Shopify!

What a scam!

It is wrong. wrong. wrong. and management knows it. Making a quick buck will not serve the company in the long run. Look at how much airlines are suffering because they started nickel and diming their customers and simply forgot to do the decent thing.

I've always liked Shopify but if I have an opportunity to leave, I will.

I realize you don't make the rules, so please forward this to management. It used to be. We make money = Shopify makes money. Win-Win. I can't believe you are now offering a business model that is Lose-Win. Shopify makes money even when I don't. Whoa! Rant over.

So there you have it folks. Whenever I find something better I'll move my store. It's just not right timing right now. Yikes.

[Sarah808]

It's for refunds you issue after March 1st regardless of  when the order came in.

[dpd1]

You’re wasting your time. Those people are drones, put there for the sole purpose of handing out meaningless robot responses. They don’t care. File a complaint with the FTC in regards to anti trust. All of the processors are doing this at about the same time. Knowing full well that people will be stuck with it then, and have nowhere else to go. And I’ve yet to see proof they are actually incurring these fees like they claim. In fact, the Visa and MC site documents state the opposite… That the interchange fees are in fact given back to processors on returns and cancels.

[aj007]

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@dpd1 wrote:
...the Visa and MC site documents state the opposite… That the interchange fees are in fact given back to processors on returns and cancels.

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Interesting. Could you please share some links to these docs?

_thanks!

[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"

[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.)

If anyone knows differently, please let me know.

Thanks..

[Sarah808]

What does "captured" mean?

That it was deposited to my account?

[Yaada]

Interesting, so are you suggesting to not have auto capture on? And just
manually capture every order?