No business owner likes to hear that their customer wants a refund, but it happens. When it does, refunding should be a quick and easy process, and it shouldn’t cost you your life savings. But if you must use PayPal, refunding customers is a pretty simple process. Here are the step by step instructions on how to refund on PayPal.

How to Refund on PayPal: Step by Step Instructions

  1. Click the Activity tab at the top of the page.
  2. Click All Transactions.
  3. Choose the transaction you want to refund.
  4. Click Issue a refund.
  5. Enter the amount you want to refund under Total Refund Amount. Note: Sometimes, PayPal’s system will allow you to refund only a partial amount.
  6. Click Issue Refund.

Things to Consider

Fees

In the past, there was no PayPal refund fee for the return or refund of goods or services. Once your refund was processed, the amount of money you refunded would be deducted from your PayPal account.

But for some reason, PayPal decided that they’re no longer returning processing fees when you refund a customer.

The fee PayPal charges is 2.9% plus $0.30 per transaction. For example, if you refunded a customer for a $1,000 purchase, you’d lose $29.30. If you refunded another customer for a $100 purchase, you would lose $3.20.

So if you’re going to be using PayPal to collect payments and process refunds, you might want to think twice about how much you’ll actually be paying in the long-run and decide whether it’s worth it.

Rules and Restrictions

Sometimes, PayPal will allow you to issue a partial refund unless the buyer used a gift certificate or a coupon. In that case, a full refund would be the only option.

Once a refund has been issued to a buyer, it can’t be reversed. So be sure of it before you take that course of action.

The money you refund will usually come from your PayPal balance. If you don’t have enough money in your account to cover the refund, PayPal will use your primary linked bank account to cover any refunds.

It could take up to five days to process your refund, so make sure you have enough money in either your PayPal account or your bank account to avoid overdraft fees.

An Alternative

If you’re just as fed up with PayPal’s business practices as the business owners that have voiced their opinions throughout the Twittersphere, it’s time to consider an alternative.

Payline’s interchange-plus pricing method can save companies like yours 0.5 to 1% per transaction in comparison to PayPal’s flat rate (which we divulged above). Payline also returns interchange and service fees on refunds.

So if you’re processing more than $1,500 per month and you don’t want to overpay each time a customer asks for a refund, think about switching to a payment processing provider that can save you the most amount of money over time.

Using PayPal for refunds could negatively impact your bottom line and that’s something none of us need, especially during this pandemic.

How to Refund on PayPal Conclusion:

Refunding your customers shouldn’t cost you much, because you are already returning their money. With PayPal, you will lose out on a significant chunk of your money when you issue refunds. That’s why finding an alternative is the obvious answer and when working with a company like Payline, you’ll reduce the amount you pay on refunds and save yourself (and your business) some of your hard-earned money. 

Use Payline’s payment calculator to see how much you can save in comparison to PayPal.

 

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