How Long Do PayPal Refunds Take?

Issuing a refund can seem like a challenging process if you are not familiar with PayPal’s services. The digital payment system may process refunds differently based on the payment method the customer used. But how long do PayPal refunds take? Read our blog for more information.

If you want to issue a refund to the PayPal account balance, then the payment system will process a refund on the same day. For users who used their bank account, a refund will be issued in the next five days, while those who used their debit or credit card can wait for an entire month.

PayPal logo on a computer screen

How Long Do PayPal Refunds Take?

Customers can expect to get their refunds through the original patent method they used for the transaction. Essentially, how long a customer and the seller will wait to receive funds on their PayPal depends on the payment method.

In case the client used their debit card or a credit card to carry out a transaction, PayPal can take up to a month to process the refund. But, if the customer needs to get a refund processed through their bank account, the waiting time can be from three to five days.

The fastest way to issue a PayPay refund is when the customer gets money back to their PayPal account balance. The online payment system will process the payment on the same day.

In situations when the PayPal account doesn’t have enough funds to cover refunds, the users can expect to have them issued from their linked bank accounts. Then, the customers will have to wait for three to five days to receive their money.

A person holding a phone and a credit card

Online Merchants Can Slow Down the Refund Process

PayPal is the best system for shopping online and accepting payments. However, it cannot speed up the process of refunds because the issue doesn’t depend entirely on the platform. It is simply an online payment platform and not an online seller. Once you ask for a refund on PayPal, you need to get approval from your merchant. Therefore, it depends on how long it takes for the seller to process the transaction and decide to send the money back to you.

What Fees Are Included in PayPal Refunds?

Fortunately, there are no additional fees when sellers issue refunds. But, one cannot expect to receive any processing fees that have already been paid. So, what does this mean?

For instance, sellers who are obliged to pay back the customer $100 for their online purchase will lose approximately $3.48. PayPal has a small processing fee that is deducted once you receive the money on your account. But, when you issue a refund to a customer, the transaction fee won’t be deducted from the refund, and you will ultimately spend a few extra dollars in order for the customer to be refunded.

Person holding a phone and dollars

How Should You Refund Payments on PayPal?

Owners of online businesses have to issue refunds often. It is part and parcel of selling online. However, if you use PayPay, handling refunds doesn’t have to cause any headaches. The entire process can be completed in a matter of seconds. Here are the steps one should take:

  • Go to the PayPal “Activity” page,
  • Select the option “All transactions”
  • Type in the amount that needs to be refunded,
  • Tap on the button “Issue refund.”

Even though it is a quick and smooth process, one should pay attention to the time it takes for the transaction to go through and keep the customer informed. What is more, losing money to transaction fees also has to be considered when pricing goods since refunds might drain your account balance.

How Much Time Do Sellers Have to Refund the Customer?

When PayPal transactions get labeled “Pending,” “Cleared,” or “Completed,” the seller has 180 days to refund them from the date the transaction was made. When the period of 180 days ends, there is a way to send the money back to buyers using PayPal’s Send Money option. But bear in mind that this type of transaction includes a fee of 2.89% plus additional 49 cents.

Persons holding phones and sending money

Can Sellers Rely on Partial Refunds?

One isn’t obliged to always send back the full amount to the buyer. Sellers can choose between partial and full refunds. In case you have agreed with the customer to refund only a certain amount of the total price, you can enter a different amount when refunding on PayPal. However, in case the customer used a gift card or a coupon to purchase goods, the online payment system won’t permit a partial refund, only a full refund.

Additionally, in situations when 180 days have passed since the payment was made, using a Send Money option for a partial refund includes a standard fee as well.

Person holding a phone with a calculator on

In Comparison With Competitors – How Different Is the PayPal Refund Policy?

PayPal’s return policy is more restrictive. The time limit for issuing refunds without being charged any fees is shorter than with other platforms. Also, the chargeback fees are higher. Have a look at our table below that compares the policies of Square and Stripe with PayPal.

Time limitThere is no limit1 year180 days
Processing fees returnedNoneAllNone
The cost to refund a $50 payment made with a credit card2.9% plus additional 30 cents$02.99% plus additional 49 cents
Dispute or chargeback fee$15, it will be refunded in case the issue gets resolved in sellers favorNone$20, the fee is nonrefundable

Accept Payments Through PayPal and Handle Refunds Easily

Online business owners have to be informed about the ins and outs of return policies when accepting payments through different online payment systems. In the case of PayPal, issuing a refund depends on the merchant and the method of payment. When the seller decides to process the refund during the period of 180 days, the refund that will be issued to a PayPal account balance will take a single day to go through. For purchases made through bank accounts, the customer can get the money back in three to five days. It takes the longest for purchases made with debit and credit cards, an entire month.