Shopify Payments refunds

When you issue a refund through Shopify Payments, the refunded amount is deducted from your next available payout. The refund status is marked as Pending for up to 2 business days. During this time, the funds are processed back to your customer. Due to varying processing times at your customer's bank, it might take up to 10 business days for the refunded amount to be received. Refunds are processed in accordance with your payout schedule, and are typically scheduled for the next payout.

You can't cancel or reverse a refund after you initiate a refund from your Shopify admin. If you initiate a refund by mistake, then you can create a new draft order and collect the payment again with the draft order.

If a refund fails, remains pending longer than expected, or isn't reflected correctly in your Shopify admin, then refer to Troubleshooting failed or pending refunds.

Refund cancellation policy

After you've issued a refund, it can't be canceled.

Refunds are issued only to the original payment method. If the card that you refunded is expired or canceled, then the customer's bank manages the rerouting of the refund through their own processes. To claim the funds, the customer needs to contact their bank, and you can provide them with the Acquirer Reference Number (ARN) to help trace the transaction.

Refund timeframes

The maximum time frame of issuing a refund depends on your customer's bank's ability to process refunds for orders after a long period of time. You can usually issue a refund up to 120 days.

Transaction fees

When processing a refund, no additional transaction fee is incurred. However, the original credit card transaction fee isn't refunded to you when issuing a refund.

The Shopify Payments Terms of Service state that credit card fees aren't refunded on Shopify Payments transactions when you issue a return to a customer. Shopify Payments incurs costs to process both the refund and the original transaction, so the original credit card processing fee isn't reimbursed.

This means that when an order's been paid for, if you later refund or cancel the order, then you don't get any credit card fees refunded, regardless of whether the order was fulfilled or not.

Tracking refunds with Acquirer Reference Numbers (ARNs)

To track the refund transaction, you can locate the Acquirer Reference Number (ARN) in the order timeline under the refund details. ARNs are assigned to refunds processed through Shopify Payments for transactions involving Visa or Mastercard. These unique reference numbers can be used by banks and credit card providers to trace transactions.

Resolving disputes

If a customer claims that they haven't received their refund, then you can provide them with the ARN and advise them to reach out to their credit card provider for further investigation.

Insufficient funds with Shopify Payments

If you're using Shopify Payments and you encounter a situation where your payout lacks sufficient funds for a return, then the outcome varies depending on your store's location:

• Austria, Australia, Belgium, Canada, Czechia, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, New Zealand, Portugal, Spain, Sweden, Switzerland, United Kingdom, United States: The balance required for the refund is debited from your bank account. This debit occurs on a day outside your regular payout schedule.
• All other countries: The remaining amount needed for the refund is deducted from subsequent payouts until the refunded amount is fully covered.

Failed debit attempts with Shopify Payments

If the initial debit attempt fails, then a second attempt is made after 3 business days. If this reattempt also fails, then you must change your Shopify Payments bank account or repay the negative balance manually.

Negative balances

Negative balances occur when the cost of refunds, disputes, or fees exceed your store's negative balance threshold. You can view your current balance in the Payouts page of your Shopify admin.

Each merchant has a dynamic negative balance limit on Shopify. When you exceed your negative balance threshold, you receive a notification in your admin, an email to the store owner email address, and a banner in your Orders page.

Managing refunds with a negative balance

When your negative balance reaches this limit, your business can continue issuing refunds, but the funds aren't returned to the customer until the negative balance is cleared. These are called pending refunds.

Orders that are refunded after the negative balance threshold has been reached have the status Refund pending on your Orders page.

If you issue further refunds after reaching your negative balance threshold and receiving these notifications, then you can view details of the total amount you owe, which is calculated from the current amount of your negative balance, and the amount of pending refunds, in the banner on your Orders page.

If your Shopify Payments account has a negative balance and the refund status remains Pending for more than 2 business days, then the resolution process varies based on your store's location:

• Hong Kong SAR, Japan, Romania, Singapore, and Mexico: Negative balances are cleared by future sales.
• Europe (using a non-Euro bank account): Negative balances are cleared by future sales.
• All other countries and currencies: The negative balance is debited from your bank account.

Clearing a negative balance

To fix a negative balance, Shopify might debit your bank account on file within 2 business days. You can also cover the negative balance with same-day sales, next-day sales, or by making a manual payment to Shopify.

Considerations for managing negative balances

• Refunds are processed in the order they were created after the negative balance clears.
• If you issue a refund after exceeding your refund limit, then the customer is notified only when the refund has processed.
• If your Shopify Payments account was rejected due to negative balances, then you can reach out to request reconsideration.

Automatic debit

Automatic debits occur when Shopify initiates a debit to cover a negative balance. This feature is available in most countries and helps maintain a funded, operational account without manual intervention from your business. After the debit is received, any pending refunds are settled. No action is required for an automatic debit to clear your negative balance.

Single Euro Payments Area (SEPA) mandate for European merchants

If you're located in Europe and use Shopify Payments, then automatic debits are processed through the SEPA direct debit system. When you signed up for Shopify Payments, you agreed to the Shopify Payments Terms of Service, which includes consent for Shopify to deposit funds and collect any amounts you owe, including fees, refunds, and chargebacks, from your bank account.

This agreement is your SEPA mandate, giving Shopify the authorization to debit your bank account when necessary to cover negative balances. The mandate is part of the standard terms you accept when activating Shopify Payments, and it's designed to ensure seamless payment processing and account management.

Make a payment

When you exceed your negative balance threshold, you receive a notification in your Shopify admin and an email to the store owner email address, and a banner displays in your Orders section.

If you want to complete a manual payment to clear the negative balance, then you can begin this process from the banner in your Orders page, or from the email the store owner receives, using the Make a payment option.

Steps:

1. From your Shopify admin https://admin.shopify.com/login, go to the Orders page.
2. In the notification banner, click Make a payment
3. On the Billing information page, you can view the total amount due, and enter your billing address information.
4. On the Payment page, enter the card details you want to use to clear the balance.
5. Click Complete payment

Before making a payment, review your balance and future payouts in case your negative balance has already been addressed. Any excess payment is credited back to you in your next payout.

Shopify Recovery team

Depending on the balance, and how long it's been pending, the Shopify Recovery team might reach out to you directly to address the negative balance, and to keep your Shopify Payments account in good standing.