Refunds and store credit
Someone sends something back and wants their money. You can do that two ways: put it back on their card, or give them credit to spend with you.
These are not the same thing. One is money leaving your business; the other keeps it. Which is why most of the useful decisions in returns are about getting people to pick the second one.
Money back to the card
Section titled “Money back to the card”The refund goes to whatever they paid with originally. Simple, and what most customers expect.
What they actually receive is usually less than what they paid, because these come off first:
- Return postage, if you’re charging for it
- A restocking fee, if you charge one
- The cost of the label
- Anything they’re swapping for
- A deduction if you let them keep the item
You can also hold the money until someone has looked at what came back — useful for anything expensive or easily damaged.
Store credit
Section titled “Store credit”Instead of cash, they get a balance to spend with you. The money stays in the business, and they usually come back and spend more than the credit was worth.
Which is why it’s worth making it more attractive. You can offer a bonus for choosing credit over cash — “get 10% extra if you take store credit” — and a surprising number of people take it. The bonus only applies where your settings allow it, so it won’t fire on things you’ve excluded.
See Shop Now for the version where they spend the credit immediately, without it ever becoming a balance.
What happens after they submit
Section titled “What happens after they submit”Three possible outcomes:
- Approved automatically, if your rules allow it.
- Held for a person, if a policy or workflow says someone should look.
- Refused, if what they picked isn’t allowed.
Once approved, if the item needs posting back, they get instructions or a label depending on how you’ve set things up.
When the money actually moves
Section titled “When the money actually moves”This is the part people get wrong, and it’s worth deciding deliberately. A refund can go out:
- As soon as it’s approved
- Once the parcel is in transit
- Once it’s been delivered back to you
- After someone has checked it and accepted it
- After a delay you set
Earlier is better for the customer and worse for you. Refunding as soon as it’s approved is the fastest for them and the riskiest for you — you’re paying out before you’ve seen anything. Waiting until you’ve checked the item is the safest and the slowest. Most shops choose “in transit” or “delivered” as the middle ground.
If you’ve turned on manual refund approval, nothing moves until someone on your team says so, regardless of the above.
What catches people out
Section titled “What catches people out”A refund is not reversible once it’s gone. If you’re unsure about a customer or an item, hold it for review rather than refunding early and hoping.
Store credit bonuses apply to the refund portion only. If someone is swapping half their order and refunding the other half, the bonus applies to the refunded half.
Deductions stack. Postage, restocking and label cost can all apply to the same return. A customer expecting £40 back and receiving £28 will email you about it — make sure your policy page says what you deduct.
Questions people ask
Section titled “Questions people ask”Can I refund to store credit even if the customer asked for cash?
Your team can change the outcome when reviewing. If you want it to happen consistently rather than case by case, restrict the options with a workflow instead.
Why did my customer get less back than they expected?
Something was deducted — postage, a restocking fee, the label, or a keep-item deduction. Open the request and the breakdown shows what came off.
How long does the money take to reach them?
Once it’s issued, that’s between their bank and their card provider — usually a few working days. What you control is when it’s issued, not how fast it lands.
Should I offer a store credit bonus?
It usually works out cheaper than refunding. You give up a small part of the sale to keep the rest of it, instead of losing all of it — and people tend to spend more than the credit was worth. Start small and see how many people take it.
Can I stop refunds to card entirely?
Yes, with a workflow restricting the options. Consider doing it for specific situations — heavily discounted orders, or repeat returners — rather than for everyone, which tends to cost you more in complaints than it saves.