Refunds
Refunds are always issued to a customer in the currency that they used to pay for the order.
When you issue refunds, the following rules apply:
- Refunds use the same payment method that was used to pay for the order. You can't issue a refund to a different card or bank account.
- Refunds are issued in the same currency that the customer used to pay for the order. If the customer paid in Euros, then they receive a refund in Euros.
- If the currency needs to be converted for the refund, then the current currency rate, and not the currency rate at the time of the order, is used in the conversion. You're charged a currency conversion fee when the payment is converted, but not when a refund is issued. Currency conversion fees and credit card fees aren't returned to you when you issue a refund.
- If you use a manual conversion rate, then refunds are calculated using the current currency rate.
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Currency risk
Because currency conversion rates fluctuate, the rate at the time of the payment is often different from the rate at the time of the refund. As a result, the converted amount that you receive for the order usually doesn't equal the converted amount that you give back in the refund. You can gain or lose money with refunds because of currency conversions.
Example
You run a store that sells in USD and in EUR, and your payout currency is USD dollars. A customer whose preferred currency is Euros orders a €85 shirt. At the time of the payment, 1 Euro equals 1.18 US dollars. After the customer pays for the shirt, the EUR amount is converted to $100 USD for the payout.
Product | Amount received in the customer's local (presentment) currency | Amount received converted to your payout currency |
---|---|---|
Shirt | €85 EUR | $100 USD |
A few weeks later, the customer decides to return the shirt. You refund your customer the amount that they originally paid, €85 EUR. The currency has fluctuated, and now 1 Euro equals $ 1.29 USD. As a result, you must convert $110 USD, which is $10 more than the amount ($100 USD) that you originally received from your customer:
Product | Amount refunded to your customer in their currency | Amount refunded that you had to exchange from your payout currency |
---|---|---|
Shirt | €85 EUR | $110 USD |
In this example, you lost money because of the fluctuations in the currency rates. If the exchange rate moved in the opposite direction (for example, €1 EUR equalled $1.05 USD), then you would have gained money.