When it comes to selling on Etsy, there is a good chance that at some point in your journey, you are going to need to issue a refund or have questions on what to do when it comes up.

Refunds can often be a bit tricky or an awkward situation for both buyers and sellers and when it comes to Etsy, that is no different.

Because a refund policy is a foundational part of good customer service, lets go over how etsy refunds work on the platform, and when and how you should issue them.

You can do all of this within Etsy and it is actually very easy. As a seller, you have access to all of your orders, and there is a button to click to issue a refund.

How To Issue Refunds on Etsy

If the payment on Etsy was made through Etsy payments (the vast majority of payments made), then the process is very easy. There does become a bit of an issue if you are refunding through a 3rd party site like Payment or doing a partial refund, so here is a step by step on how Etsy refunds can be done.

1: First, go to “Your Account” when on Etsy.com and click on the shop manager:

2: Once you are inside of the shop manager, you will see orders and shipping on the left hand menu. Click on this:

3: On the orders and shipping page, find the order that you want to refund and click on the little “…” icon next to that order.

4: You will then want to click on the issue a refund option.

5: Once you select the refund button, you will be asked to give a reason for the refund and a message to the buyer which you can fill out. This will allow you to select a full refund or a partial refund by giving a specific amount to refund on the order.

6: Once you are done, you can review the refund and click on submit.

This is a super easy way to issue a refund after a customer requests it, you mess up an order, or anything else. That being said, this is really the only way to do it if the payment was made through Etsy payments. If your customer made a payment through Paypal without Etsy payments, you will need to go over to Paypal and refund the payment that way.

Will Etsy Refund the Seller Fee?

This is often times asked from sellers who have never processed an Etsy refund before.

When you go into Etsy to refund a sale, you may be wonder if the seller fees are refutnred. You refunded the unwanted order and are providing customer service that is above and beyond so you would expect that Etsy would give the seller fee back right?

The good news is that they do! If you go in and refund through the Shop manager, Etsy will refund the Etsy transaction fee as well as the processing fee for that specific order.

You can see this in your payment account. These fees will be credited automatically so you can make sure you are not losing any additional money.

How Do You Pay For The Etsy Refund?

The good news is that as long as you are using Etsy payments for your orders, then paying for the refund is really easy because the money has already been deposited into your Etsy account. The refund will automatically be deducted from this account and if you do not have enough funds, the card on file will be charged for the refund amount or the partial amount if you have some money in your Etsy account.

Can Etsy MAKE You Issue A Refund?

Typically, Etsy will not make you issue a refund if your shop does not support any refunds (this is why having shop policies is really important). If your Etsy policy is clear that your business will not issue refunds or returns, then they will not require you to issue a refund unless the customer complains directly to Etsy and the case gets escalated.

There are really only 2 times Etsy may force you to process a refund.

The first is that if you refuse to issue a refund even though the shop you started has a refund policy that the customer has followed. In this case, you will be required to issue the refund as your policies state.

The second is that your customer did not receive the order at all or what they got was not what your listing described on Etsy. This can happen occasionally if you are doing print on demand (we have seen it happen!), but this is a rare occurrence.

If you have a good relationship with your customer, you can typically talk to them about the order and fix it in some way. We have seen lots of terrible interactions turn into 5 star reviews just from great customer service.

Refunds on Etsy do not need to be complicated but they are something that you will eventually run into. If you make sure to handle the problem quickly and professionally, your Etsy shop will only continue to grow as this is all part of the business!