Cash refunds can be frustrating for Shopify store owners.
Refunds reduce revenue and cash flow for business owners, whether or not a request is legitimate. Processing them also takes time.
Refunds are an unavoidable part of running an ecommerce business.
Online purchases have a return rate of at least 30%, compared with 9% for purchases made offline.
Offering store credit instead of a cash refund gives business owners a way to manage cash flow.
For a change-of-mind return, credit keeps the money in your business and brings the customer back to spend it on a future visit.
Consider the following options when giving customers store credit.
What is Store Credit?
Store credit is when a store offers a specific amount of credit that a customer can use to buy items from your store. This is usually issued when a customer returns an item that isn’t eligible for a refund. Make sure that your refund policy page clearly states when a customer cannot receive a refund.
Can You Give Store Credits on Shopify?
Unfortunately, Shopify doesn’t have any functionality in the store admin that allows merchants to provide store credits to the customer. For store owners who are subscribed to the Shopify Plus plan or higher, you can issue gift cards equivalent to the refund total amount.
Some store owners give discount codes worth the refund amount. Gift cards and discount codes have different consequences when used for store credit.
Shopify store-credit apps provide another option if you want to avoid the extra work. Most charge a monthly subscription plus a small transaction fee beyond a threshold. Others set a maximum credit balance according to your subscription.
What Is the Difference Between Store Credit, Discount Codes and Gift Cards?
Use a discount code for a one-time offer intended to prevent a return or refund.
Discount codes cannot retain an unused balance. A customer with $50 in credit cannot spend $25 and return later to use the rest.
Gift cards let you provide a refund while allowing customers to track their remaining balance and spend it when they choose.
Customers must keep the gift-card number themselves because it is not linked to their account.
Even with that limitation, gift cards can be the most cost-effective way to provide credit on Shopify.
Accounting implications can also affect whether you choose gift cards, discount codes or store-credit apps.
When bringing in an accountant, prepare your business details alongside your refund policy and gift-card reports. Australian practices using client onboarding software for accountants can collect the ownership and business information first, giving the accountant a clearer starting point for reviewing your records.
How to Give Your Customers Store Credit
- Create discount codes
- Issue gift cards
- Use Shopify apps
1. Create Discount Codes
Discount codes reduce prices by a fixed amount or percentage for products or collections. Open ‘Discounts’ in Shopify admin and select ‘Create discount.’
Name the discount code so you can recognise its purpose later, for example RETURNCREDIT.
Choose the discount type. For store credit, this is usually a fixed amount deducted from the order.
Under Applies to, choose whether the code covers all products or only specific ones.
Choose the customers who can use the code. Customers whose email addresses are saved in Shopify will be available to select.
Select Generate code, then send the resulting discount code to your customer.
How to Create Discount Codes
- Go to Discounts > Create discount in the Shopify admin dashboard.
- Type in the discount code name.
- Select whether the discount will be a percentage-based or a fixed value.
- Enter the value of the discount.
- Under “Applies to”, select Specific customers and choose the customer the code will be for.
- Click Generate code.
2. Issue Gift Cards
In Shopify admin, open Products on the left and select Gift cards from its dropdown.
Tap on the Issue gift card button.
Enter the amount you want the gift card to be worth.
Search under Find or create a customer using the recipient’s name or email address. You can also create a customer to receive the card.
Use Set expiration date if you want the card to expire. Select Save to issue it to the customer.
How to Create Gift Cards
- Go to Products > Gift cards > Issue gift card in the Shopify admin menu.
- Type in the value of the gift card.
- In Find or create a customer, type in the customer’s email address.
- (Optional) Go to the Set expiration date section and set an expiry date.
- Click Save and the gift card will be sent to the customer.
3. Use Shopify Apps
Issue customer credit through a Shopify app such as Rewardify or Rise.ai, or use Freshcredit.
These apps aim to make credit easier to issue and limit lost revenue. Their loyalty features can reward actions such as signing up or making a first purchase, as well as reaching a lifetime minimum spend.
With Freshcredit, for example, customers can keep a credit balance in their account and spend it whenever they choose.
Apps including Rise.ai can connect to Shopify POS. This iPad version of Shopify tracks sales across channels, including online and in-store sales as well as mobile orders.
How to Issue a Refund
Process a refund for your records before issuing the gift card. This keeps inventory accurate and lets you replenish stock.
Open Orders in Shopify admin.
Select the order number, or search for the customer by name or address. You can also search by their phone number.
Select the items to refund and their quantities. When Shopify calculates the total, enter 0 because you are giving the customer a gift card instead.
