Turbotax-Less BANK Refund Processing Service Fee??

Do processors return fees when I give a customer a refund?

Some do, some don’t.

PayPal Doesn’t Return Fees on Refunds

In 2019, PayPal announced a change to its fee policy. In short, when you refund a customer through PayPal, you will not receive any of the processing fees you originally paid on the transaction.

This is not limited to PayPal. In fact, many processors keep your fees. Don’t make the mistake of thinking that just because you switch from PayPal that processors will automatically return fees. In reality, you need to be on a pricing model that passes those fees back to you, and with a processor that doesn’t simply pocket your refund fees.


How to Avoid PayPal Fees from Refunds

Regardless of how you feel about this policy change, and whether or not you will be continuing to use PayPal or not, there are things you should do to protect yourself from paying unnecessary fees related to refunds.


All waiver codes have been tested and will fit in the waiver code field; however, we understand that some GDS subscriptions may have a limitation. When you are not able to add the entire waiver code, please ensure that you add additional information in the OSI or Remark field, prior to refunding, otherwise the information is not transmitted to the airline. This is a requirement for the audit, or a debit memo will be issued.

Example: ACUSKEDCHG1234. If the Flight number (1234) will not fit; Add the flight number and additional information in in the OSI or Remark field:

  • AC1234 (input correct flight #) cancelled due mechanical; customer chose not to fly

A debit memo will only be issued when you fail to provide AC with the complete reason for refunding a non-ref ticket.

Below are one of six refund codes that must be entered in the WAVR field when processing a refund:

Situation Definition Refund Waiver Code 10 Characters Additional 4 digits
24 Hours1 Passenger cancelled no later than 24 hours after purchase AC24HRRULE N/A
Unacceptable Schedule Change Caused by carrier; purpose of trip no longer exists ACUSKEDCHG Add flight # Example: ACUSKEDCHG0871
Unacceptable Delay, greater than 2 hours Caused by carrier; purpose of trip no longer exists ACUDELAY02 Add flight # Example: ACUDELAY02871
Unacceptable Flight Cancellations Caused by carrier; purpose of trip no longer exists ACFLTIRROP Add flight # Example: ACFLTIRROP871
Due death of passenger or travelling companion2 Passengers don’t need to be on same PNR, but must show proof they were traveling together, and the traveling companion passed away; purpose of trip no longer exists ACDUEDEATH Add relationship: FTHR, MTHR, SIST, BROT, GMTH, GFTH, CHLD, GCHL, COMP Example: ACDUEDEATHFTHR
Jury/Military Duty3 Passenger can no longer travel on their ticket because they have been called to jury duty or military duty ACCAL2DUTY Add Date Month Year Example: ACCAL2DUTY0119

1Consult Tariff Rule 100.

2Consult Tariff Rule 100 – H; retain legal documents for up to 6 months.

3Consult Tariff Rule 100 – G; retain Legal documents for up to 6 months; proof that the duty is new; trip booked prior to duty.


Refunds that could have been processed in the GDS but have been sent to Winnipeg Refund Services will be subject to a non-disputable refund processing administration fee ($50 plus applicable taxes), per ticket. The fee is collected through an Agency Debit Memo (ADM) or a reduced Agency Credit Memo (ACM).

If a customer purchased a ticket with your travel agency or website, you are the merchant (place of purchase) and only you have the payment information. As the merchant it is your responsibility to refund the customer whenever possible, however we know there are times when you cannot process the refund and that is why we have various refund applications or ways for you to process the refund without a significant monetary impact.

Administration fees are collected when the agency could have actioned the refund and did not.

Error fees will be collected when steps have been omitted or done incorrectly.

If Refund Services needs to correct the error and process the refund you may receive a debit memo for more than one fee.

Refund calculations

Please refrain from sending requests to Refund Services or Customer Relations for refund calculations. Send the request for refund to Refund Services and we will process the refund, if applicable (fee may be charged).

If you have made a refund error and have requested that Refund Services fix the error, you may be subject to both a processing fee and an error fee.

Refunds with Split Accounts

In a situation where you have a split account, your partner takes a certain percentage of the sales. We often get asked what happens when a refund happens in this circumstance. To answer this question, we will use an example.

Let us say that the customer paid $100 for your product and that your partner gets a 70% split. $100 will go into your account, and then part of it comes out for the FastSpring fee. For the sake of this example, suppose the FastSpring fee was $5.00. (Your actual fees may vary.) So $5.00 would come out of the $100 order, leaving $95. Then your partner's 70% split would be deducted next and paid into their account; that is, ($95 x 0.70), or $66.50. This would leave ($95 – $66.50), or $28.50, credited to your account.

If there is a full refund, the $66.50 is removed from your partner's account and put back into your account. The FastSpring fee of $5.00 is also put back into your account, so now all of the original funds other than your $28.50 share have been credited to your account. Then $100 (including your $28.50) is returned to the customer, and there is a 3.5% return fee–in this case ($100 * 0.035), or $3.50–assessed to your company.

Merchant Service Provider: Choosing The Best for Your Business Size

Are you just starting your business? Do you want to expand to have an online presence? Does your business have multiple locations? No matter your current business size or the future you see for it, there’s a Merchant Service Provider that will fit your business. The challenge is how to choose the best one.

Community Backlash

This has caused quite a backlash in the community, and people on Twitter, Facebook, Reddit, and PayPal’s direct community are making it known that they are not happy.

Where Does the Credit Card Refund Fee Come In?

When you issue a refund to your customer for the f

When you issue a refund to your customer for the full amount, your customer sees every penny reflected back on their account. It may be a different story for you, however. Let’s look at how a few big name processors handle refund fees.

While you may or may not have heard of Stripe, this third-party credit card processor is behind some of the biggest names in retail — Target, Amazon, Adidas, and Lyft to name a few. (Read our Stripe review for a closer look at all its services.) Stripe works behind the scenes and is geared for those who want a completely branded and customized checkout — which is why many merchants don’t know the company by name. Surprisingly, we found that Stripe’s policies are to refund none of the transaction fees — which includes a flat rate of $0.30 per successful charge plus another 2.9% of the purchase price. Beyond that, there is no additional refund fee for the merchant.

Speaking of payment giants, let’s talk about the elephant in the room: PayPal. Under the initial policy, PayPal (a third-party processor) would refund the percentage fee from a transaction (2.9% for most online businesses), but not the additional $0.30 per transaction. However, that has changed. In the spring of 2019, the company announced policy change that affects refund fees — as of May 7, 2019, PayPal will no longer credit merchants for any of the original transaction fees. 

However, that’s not always the case. Some processors do refund the original transaction fees to the merchant. It really just depends on who your processor is.

For example, Square, another large payment giant (and third-party processor) that is often grouped with Stripe and PayPal, refunds all of the transaction fees to the merchant. Square also doesn’t assess a chargeback fee, a practice very few other processors have adopted. The takeaway here is mostly that the actual processor’s business model doesn’t dictate the policy — it’s down the actual company itself. 

Payment Depot, a top-rated processor that uses a subscription-based pricing model, also returns the payment processing fees to the merchant. The only exception is American Express interchange fees. Since Amex doesn’t refund the interchange fees, neither does Payment Depot.

Another top-rated processor at Merchant Maverick, National Processing, has opted for a different approach: When a merchant issues a refund to a customer, the company refunds the fees but will also charge a $0.05 transaction fee. 

So you can see that there are many ways to go about handling the process of refunds and deciding whether to refund processing fees to you, the merchant. However, keep in mind that the processing companies in many cases may be passing down expenses incurred by the acquiring bank — or they’re simply recouping some of the risk involved with processing returns in general. Processing payments and returns are both services, and as such, we all can expect some fees for use. It’s frustrating, but not unreasonable, for the financial partners involved in a transaction to want to get paid for their parts in moving money around — even if it’s moving money back to the customer in the first place!

If you’re still deciding on a payment processor, a refund fee (or lack thereof) shouldn’t be the only major factor. Whoever you end up going with, it pays to consider the entire scope of benefits and costs when deciding on a company that’s right for you.

And if you already have a processor and you’re just now figuring out that the company hasn’t been returning the processing fees to you after a refund, don’t panic! It’s not the end of the world, especially if you’re otherwise happy with the service.

Below we have some tips you can do as a merchant to prevent or minimize returns from the get-go.

Bundled Pricing Allows Processors to Easily Intercept Refunds

If you’re not receiving credits, your processor may be using a bundled pricing scheme. If so, your statement probably looks something like the one below.

This is a sample statement from another business t

This is a sample statement from another business that we helped. Before finding CardFellow, this business’s processor was using bundled pricing, and as you can see, there’s very little detail on the statement.

On a bundled pricing model the processor essentially pays interchange fees on behalf of the business. However, they then charge the ambiguous qualified, mid-qualified, and non-qualified rates. In effect, bundled pricing positions the processor between interchange and the businesses they serve, giving them power over your money.

Interestingly, this position also makes it possible for a processor to intercept interchange credits rather than passing them along to you. The illustration below shows you the flow of interchange charges and credits.

In this illustration, we see that the processor (in the middle) pays interchange to the banks/card brands on behalf of the business, and charges the business arbitrary rates and fees. (The red lines.) When a refund occurs, the processor receives interchange credits. However, the processor isn’t obligated to pass those credits to the business, and pockets your money.

Related Article: Top 3 Hidden Fees of Credit Card Processing.

Requesting a Domestic Service Refund

Find the shipping service you used listed below and review the How to Apply details to see what is eligible for a refund, when to apply, and what you’ll need to apply. For detailed eligibility information, see the Domestic Refunds – Eligibility Details (DMM 604.9.2).

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How to Write a Refund Policy That Increases Your Conversion Rate

Store owners, especially new ones, often worry about their return policies. Sure, returns cost money, but so do your merchandise, shipping, rent and marketing.


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