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Credits vs. Refunds

Heather Windler
Updated

Overview

This article reviews what Customer Credits and Refunds are and how to use them in your workspace.

A Refund moves cash from your account to the customer's original payment method.

Customer Credit

A Credit acts as 'store currency' for your customer to be used on future orders. In contrast to refunds, Customer Credits allow you to resolve issues while ensuring the value remains with your business.

 

Refund moves cash from your account to your customer's original payment method

Customer Refunds

A Refund moves cash from your account back to the customer's original payment method. While credits keep revenue in-house, Refunds (returning funds to the original payment method) are essential for maintaining trust.

 

Why Use Credits Over Refunds?

  • Retain Revenue: No money leaves your bank account, preserving your immediate cash flow.

  • Drive Future Sales: Credits act as an incentive, encouraging the customer to return and shop again.

  • Efficiency: Credits are often faster to process than traditional banking transactions.

When to Use Refunds Instead of Credits

  • Major Product Defects: If a product is fundamentally broken or unusable, a refund is the standard for fair resolution.

  • Order Cancellations: If a customer cancels an order before it ships, a refund is usually the cleanest way to close the transaction.

  • Final Closures: If a customer is unhappy and does not intend to shop with you again, a refund prevents further friction.

 

CREDIT & REFUND HOW-TO's: 

 

 

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