How to Refund a Payment on PayPal: A Simple Guide

How to Refund a Payment on PayPal

Accepting payments online means that you will need to issue refunds from time to time. You can easily refund PayPal payments. You can do this in just a few clicks from your Activity page.

  • Select the transaction.
  • Select “Issue a refund.”
  • Enter the amount of your refund.
  • Select “Request a refund.”

Although it may take only a few steps to issue a refund on PayPal, there are some other things to consider. What time will the funds appear in your customer’s account? How to request a refund on PayPal and what is the cost? These are some frequently asked questions about PayPal’s refund policies and processes.

How long does a PayPal refund take?

Paypal Refund Time: PayPal can process refunds within 24 hours of the issue, depending on the original method of payment. PayPal refunds are sent back using the original payment method. This can mean that it may take different amounts of time before the funds show up.

  • PayPal account balance: same day.
  • Bank account: Up to 5 days
  • Credit card or debit card: Up to 30 days

By default, refunds will be paid from your PayPal account balance. If there isn’t enough money in your account to pay the refund, the entire amount will be issued as an electronic check from your linked bank account. PayPal states that eChecks can take up to six business days to clear at banks, which can cause delays in the refund process.

Is there any PayPal refund fee?

PayPal does not charge additional new fees when you issue a refund. You won’t be able to get any of the fees that you paid to process the initial transaction.PayPal was used to refund a portion of the processing fees associated with refunded transactions. But it changed the policy in 2019.

PayPal isn’t the only one that keeps fees from refunded transactions. However, this practice isn’t common. Stripe keeps the fees. Square refunded the merchant the entire processing fee to the merchant. Amazon Payment divides the difference and keeps its percent-based processing fees while refunding the 30-cent authorization charge.

Refunds that you issue voluntarily are subject to all of the fees and costs described above. Chargebacks are charges that customers make to their card issuers in order to get a refund on disputed charges. These fees can be quite high. PayPal charges a $20 non-refundable fee for each chargeback that is filed against any transaction not covered under its Seller Protection program.

What are PayPal refunds’ time limits?

Transactions that have a status of “Completed”, “Pending”, or “Cleared”, are refundable within 180-days from the transaction date. You can send funds to buyers in a new transaction after 180 days using PayPal’s standard Send Money function. This transaction will be subject to a fee of 2.89% plus 49c.

PayPal’s 180-day limit on refunds is much stricter than other competitors. For example, Square allows refunds for up to one year, while Stripe does not limit refunds.

PayPal can issue partial refunds

You can issue a partial or full refund on most PayPal transactions. PayPal will only allow you to issue a partial refund if the buyer used a coupon, gift certificate, or another form of payment.

You could also use the “Send Money” function to send partial refunds, as with those after the 180-day period. However, you would need to pay the fee.

What is the difference between PayPal’s refund policies and those of its competitors?

PayPal refunds are more expensive than some of NerdWallet’s favorite competing payment gateways. Transactions can be refunded in less time than usual, without additional fees. This chart compares refund policies between PayPal, Stripe, and Square.

PayPal refund chart

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