Refunds Made Simple: How Do Refunds Work on Shopify?

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Refunds are a necessary part of e-commerce. Customers will occasionally change their minds or receive the wrong item. In these situations, it’s important to have a fast, frictionless process in place for issuing refunds and keeping your customers happy. 

If you’re new to e-commerce or just launching a new Shopify store, setting up processes for handling returns and refunds can be intimidating. However, by using Shopify’s built-in features, you can streamline this process and make sure your customers are happy every time. Let’s take a look at how you can create an easy refund process with Shopify so that your customers will come back again and again.

What is a Shopify refund?

A Shopify refund is when a customer returns an item and receives their money back. 

Refunds are one of the most critical parts of e-commerce because they allow customers to change their minds after making a purchase. Refund requests can come for a variety of reasons, including the customer ordering the wrong item, the item arriving damaged or defective, or the customer deciding they don’t want the item after all. 

When to issue a refund on Shopify

The best rule of thumb for when to issue a refund is to follow the refund policy stated on your website. Each order should include a refund policy that states when it’s appropriate for customers to receive a refund. 

When deciding on a refund policy, you need to weigh the cost of issuing refunds against the financial impact of lost sales. It’s impossible to know how many customers will change their minds after making a purchase. 

By setting a refund policy, you can increase the trust customers have in your store and reduce the number of refunds you have to process. Let’s say you sell t-shirts for $25 each. You set a refund policy that states you’ll offer a refund if a customer accidentally orders the wrong size. In this scenario, you may decide to issue refunds to all customers who accidentally order the wrong size.

How to create a Shopify refund automatically

Many Shopify stores will automatically issue refunds under certain circumstances. For example, if a customer orders the wrong item or if an item is out of stock, you can refund their order automatically. 

If your store uses Shopify’s built-in order management software, you can easily set up these automatic refunds. 

How to create a Shopify refund manually

When you need to issue a refund that doesn’t fall under any of the automatic refund conditions, you can manually create a refund on Shopify. 

To manually create a refund on Shopify, follow these steps: 

– Sign into your Shopify admin.

– Navigate to Orders and select the order you want to refund. 

– Select the order item you want to refund and select Refund from the drop-down menu.

– Select the reason for the refund and select Done

– Select Send order.

Tips for managing returns and refunds

– Keep an eye on your refund rate

If your refund rate is higher than normal, you may have a problem with your product or your return policy. If this is the case, it’s important to take action. 

– Be transparent with your refund policy

Your refund policy should be clear and easy to find on your website. If you have a long, complicated refund policy, customers will be less likely to trust you and more likely to request a refund. 

– Keep records of your returns

It’s critical to keep track of which products are causing the most returns and which customers are requesting the most refunds. You can use this information to make adjustments to your product selection and return policy. 

– Use quality images and accurate descriptions

Customers will likely want to return an item if the image on your website was misleading or the item was damaged during shipping.


The refund process is an important part of any e-commerce business. It’s important to remember that refunds are a part of doing business online, and they’re not a sign of failure. In fact, following these tips for issuing refunds can help you retain your customers, while also providing an excellent customer experience.

To streamline your Shopify accounting, consider using specialized accounting software. Synder can take the load of completing mundane manual tasks off your shoulders, ensuring accurate recording and categorization of transactions into your books. Let Synder help you with tedious accounting processes and going through tax audits!

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