Giving a refund through PayPal

PayPal is used around the world by individuals, private sellers and businesses of all sizes. Safe and secure, the service enables people to pay for goods, send money to family and friends and accept payments from customers quickly and easily.

Issuing a refund through PayPal is just as straightforward as taking a payment. Find out exactly how to pay your customers back below.

Organising a refund

If a customer asks for a refund, retailers and small businesses are required to stick to their own returns policy. Every returns policy needs to state a return period, detail how refunds will be issued (cash, store credit, exchange etc.) and explain who is liable for return shipping costs when applicable. Faulty products, under the Consumer Rights Act, qualify for an automatic refund when returned within 30 days of the initial purchase.

Further information concerning returns and refunds can be found on the. GOV website, and in our guide on consumer rights when buying from a retailer .

Private sellers, meanwhile, are not obliged to issue a refund unless goods are not as described.

If you have accepted a customer's request for a refund, you can arrange for this to be issued through PayPal if the following terms are met:

  • Refunds can only take place for transactions from the past 180 days
  • Refunds can only be made when the status of a customer's payment is 'Completed', 'Pending' or 'Cleared'

Issuing a refund: step by step

PayPal make it simple to issue a refund, whether you've sold an item from your own website, through eBay, Etsy or Depop or received money directly using PayPal.

Below, both businesses and private sellers can find out the correct way to give a refund, either full or partial, back to their customers.

Refunds as a business

Whether your business is large or small, a PayPal Business account will support your transactions. To issue a refund to one of your customers, you simply need to:

  • Log in to the PayPal account associated with your business
  • Click 'Activity'
  • Scroll to find the transaction you wish to refund
  • Click on the payment
  • Tap 'Issue a refund'
  • Enter the correct details under 'Refund amount'
  • Press 'Continue'
  • Review and press 'Issue a refund' to complete

Refunds as a private seller

For private sales, the process is slightly different. A seller must take the following steps to issue a refund:

  • Log in to your PayPal account
  • Select 'My PayPal'
  • Click 'Activity'
  • Search for the payment that requires a refund
  • Click on the payment to view more details
  • Choose 'Refund this payment'
  • Enter the refund amount, and press 'Continue'
  • Check the information entered is correct and click 'Issue Refund'

Full refunds for disputes

If a customer has raised a case against you for an item, sending a full refund will automatically close the dispute. However, if you are concerned about consumer rights that surround refunds, you may find our guides on retailers and private sellers useful.

The process for issuing a refund for a dispute is different to issuing a regular refund, as you must make sure you directly respond to the open case.

To offer a refund and close a dispute as a business:

  • Open Tools
  • Select Resolution Centre
  • Find the correct transaction from Open Cases
  • Click on 'Case ID'
  • Press 'Issue a full refund'

Private seller disputes

For private sellers, the process for issuing a refund to settle a dispute is almost identical to the steps above. However, instead of selecting 'Tools', click 'Resolve a problem in the Resolution Centre'. This is usually found under the section titled 'More about your account'.

Time taken to process a PayPal refund

Depending on the method of payment your customer used, the time taken to process a refund on PayPal will vary.

For credit card transactions, PayPal will send money to your customer immediately. However, it may take the card company time to process this transaction.

For payments taken from a bank account or PayPal balance, money will be refunded back into the customer's PayPal balance. Typically, refunds will be completed within three to five days, but may appear instantly as 'Pending' in your customer's PayPal account.

PayPal Here

Some businesses may choose to take payments using PayPal Here. If this applies to you, the following steps must be taken (either on an iPhone, iPad or Android device) to issue a refund to your customer.

To give a refund using PayPal Here:

  • Open and log in to the PayPal Here app
  • Select 'Menu'
  • Tap 'Sales Activity'
  • Choose 'Sales History'
  • Locate the transaction you wish to refund
  • Tap the transaction and press 'Refund'
  • Enter the amount you wish to refund to your customer and press 'Refund' once more

Easy to use and reducing the risk of online fraud, PayPal is an excellent and trusted service for both buyers and sellers. If you're considering starting a business, or selling your own goods online with PayPal, don't forget to take a look at our useful selling guides - from eBay to Etsy, you have plenty of platforms to choose from.