Every e-commerce merchant today should have a refund policy. Having a clearly defined refund policy shows your customers that you stand behind the products or services that you provide. If you’re a new e-commerce merchant, you might be wondering why you need a refund policy and where you can find examples. Keep reading to learn more about refund policies and how they protect your business from the hazards of too many chargebacks.


What is a Refund Policy?

A refund policy outlines the terms under which your business will accept returns and provide a refund to customers. This includes information such as:

  • How a return or refund request is initiated
  • Number of days after purchase a return or refund is accepted
  • Who pays return shipping (customer or business)
  • In what form the funds are returned to the customer


Benefits of offering a Refund Policy

There are many benefits to providing customers with an uncomplicated refund policy and a painless return process. First, customers are more comfortable doing business with merchants that are willing to invest in customer satisfaction. Most consumers will verify a business’s refund and return policy before completing a purchase. So, if you want your business to grow, you’ll need to provide the assurances that come with a good refund policy. 

It’s also important to recognize that some states have laws that protect consumers when making purchases from sites that don’t have a published return policy. For instance, under New York state law if a retailer does not provide a refund policy then a consumer has thirty days to make a return and request a refund. Clearly, it makes sense to have your own to control the terms of a return. This also avoids the confusion of dealing with various refund laws from consumers all over the globe.

Another crucial reason to have a good refund policy is to avoid the negative consequences of excessive chargebacks to your business. When customers are unhappy with a product or service, and you don’t provide them with an easy pathway to resolve the issue they tend to go through the bank or payment provider to request a chargeback. Additionally, they could leave an ugly review on your site which may result in lost future revenue. If you are running into issues with chargebacks, please contact Payline because we have solutions to help.


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Difference between Refunds and Chargebacks

Refunds and chargebacks both result in lost revenue for the merchant, so why is one better than the other? If a merchant has a published refund policy, the customer has the opportunity to communicate directly with the business to initiate a return and request a refund. The result is a positive customer experience. This fosters goodwill between the merchant and customer that’s likely to ensure return business and garner great reviews for your site.

A chargeback is when a bank is contacted by a customer to reverse a charge that has already been paid to a merchant’s account. The merchant is not involved in initiating the chargeback transaction and has no option to remedy whatever problem may have occurred with the sale in the first place. 

Chargebacks have many negative consequences for merchants. Banks and payment providers charge fees to process chargebacks and may raise those fees if your business has excessive chargebacks. Too many chargebacks could also reflect poorly on your business. This might imply that you’re selling inferior products or engaging in faulty business practices. Finally, a pattern of excessive chargebacks for your site could result in fines or an account suspension by your bank.

Unfortunately, if you don’t have a posted refund policy, a customer will most likely have no choice but to contact their card provider or bank to initiate a chargeback. On the other hand, a refund policy protects your business by keeping the matter of a return and refund request strictly between you and the customer. Now that you’ve decided you need a one for your business, what are some of the types?


Refund Policy Examples

When writing a refund policy make sure that the language and terms are clear and easy to understand. Try to avoid having a policy description that is long and complicated. If the policy is tedious and time-consuming to read, customers may pass on buying from your site. It’s ideal to display your refund policy prominently on your site and to also include the policy terms on the customer’s emailed receipt. 

These come with varying terms, and you can often find the templates on different e-commerce platforms but what’s the best refund policy for your business? The following are some examples.

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30-Day Refund

A ‘30-day refund’ policy is fairly common in the retail world. This refund policy allows a customer 30 days from the purchase or delivery date of the item to return it for a full refund. Almost all policies including a 30-day policy, state that items must be returned in original packaging and with original price tags.


Exchange Only Return Policy

‘Exchange only’ means that your business won’t be providing a monetary refund for any customer purchase. If an item is returned, it’s usually to swap it out for a different item from your site. Alternatively, it could be for a site credit that can be used within a specified period of time. In theory, this type of policy may protect a business from financial loss. However, it’s less popular with customers and may result in more chargebacks due to perceived inflexibility on the part of the merchant.


No Refund Policy

A ‘no refund’ policy is common with digital sales because once a customer has downloaded digital content it stays on their device. If you’re in the business of digital sales and choose to implement a no-refund policy, you should have language that says, “All Sales Final”. Ensure this is clearly displayed on your site and especially on the checkout page. It is important to note that there are legal implications on a no refund policy. 

As a final note, keep in mind that although there are many types of refund policy templates available on the web. It’s best not to just copy and paste terms that have been created for someone else’s business. Also, the best customer satisfaction results from having a refund and return process that’s as easy as the customer’s initial purchase.



Shopify does a great job by creating a refund policy tempelate generator.These sample templates are not legal advice and by using them you agree to their disclaimers. With this tool, they also allow for Privacy Policy templates and Terms of Service Policies to be created and sent to your email



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