How to Refund an Order in Magento 2? A Step by Step Guide

How to Refund an Order in Magento 2? A Step by Step Guide

Refunds are an integral part of an e-commerce business. While it may not be a pleasant term for store owners, it can become unavoidable. No matter how hard you try, situations may arise where refunding payments to customers becomes necessary. While you can take steps to reduce your refund rate by enhancing your products and services, you cannot entirely eliminate it.

The refund process in Magento 2 is simple and straightforward. In this guide, we will walk you through the steps involved in refunding an order in Magento 2. But before that, we need to understand credit memos as it’s a part of the refund process.

What is Credit Memo in Magento 2?

A credit memo is a financial document generated to record the refund or credit issued to a customer for a particular order. Credit memos are typically associated with a specific order and are used when you need to refund all or part of the payment made by the customer for that order. They are a crucial part of the order management and accounting process within the Magento 2 e-commerce platform.

Now that we know what a credit memo is, let’s see how to refund an order in Magento 2.

Steps to Refund an Order in Magento 2

  • Login to your Magento 2 admin panel
  • Navigate to Sales > Orders
  • Click on the View link of the order you want to refund. The next page displays all the information related to the order.
Magento 2 Orders Grid
  • Click on the Invoices section on the left side to see the invoice for this particular order.
  • Once in the invoices section, click on the Credit Memo to create a credit memo for this order.
Create Credit Memo in Magento 2
  • Under the Items to Refund section, you can choose whether or not to return the item to stock upon refund and the quantity to be refunded.
  • Press Update Qty's button to update the changes.
Refund Items and Quantity in Magento 2 Under the Order Total section, you can update the following values.
  • Refund Shipping: The shipping amount you want to refund
  • Adjustment Refund: Additional refund amount that isn't directly associated with returning this specific product.
  • Adjust Fee: The fee you want to charge as an adjustment. This fee is subtracted from the total amount.
Refund Order Totals in Magento 2  

When you are done, click Update Totals to apply the changes.

Now click Refund Offline to process the refund. Offline refund is a manual refund without involving the payment gateway. Offline refund means that the refund is handled outside of the Magento system. A possible scenario is if the customer you are refunding to has paid through a credit card, check, or bank transfer, you have to refund through an offline payment method. 'Online refund', on the other hand, involves initiating a refund through the payment gateway used during the original purchase. The refund amount is returned to the customer's credit card or online payment account through the payment gateway.