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Currency Risk for Refunds

 

Refunds are always issued to customers in the currency that they used to pay for the orders.

When you issue refunds, the following terms and policies apply:

  • The payment method used for refund is the same as the one used to pay the orders. Refunds cannot be issued 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, they receive a refund in Euros.
  • If a currency conversion is needed for the refund, the current exchange rate is used, rather than the exchange rate at the time the order was placed. A currency conversion fee is charged when the payment is converted, not when a refund is issued. Currency conversion fees and credit card fees are not returned to you when you issue a refund.
  • If you use a manual conversion rate, the current exchange rate is used to calculate the refund.

 

In This Article

 


 

Currency Risk

Due to fluctuations in exchange rates, the rates at the time of payment are often different from those at the time of refund. As a result, the converted amount you receive for the order may not match the converted amount you refund. Due to currency conversions, you may incur losses or profits.

 


 

Example

You run a store that sells in USD and EUR, and your payment currency is USD. A customer whose preferred currency is Euros orders a €85 shirt. At the time of payment, €1 is equivalent to $1.18. After the customer pays for the shirt, €85 is converted to $100 for payment.

Product Amount Received in Customer's Local (presented) Currency Amount Converted to Your Payment Currency
Shirt €85 $100

Several weeks later, the customer decides to return the shirt. And you need to refund the customer's initial payment of €85. Due to fluctuations in the exchange rate, €1 now is equal to $1.29. Therefore, you have to convert $110, which is $10 more than the amount ($100) you initially received from the customer.

Product Amount Refunded to Customer in Their Local Currency Amount Refunded that You had to Exchange from Your Payment Currency
Shirt €85 $110

In this example, you incur a loss due to fluctuations in the exchange rate. If the fluctuations in the exchange rate move in an opposite direction (e.g. €1 equals $1.05), you would then incur a profit.

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