As a seller, you may encounter a refund request or chargeback. While you can’t completely avoid them, setting clear expectations for customers can reduce the chances of disputes.
Although most orders go smoothly, it helps to understand how refunds and chargebacks work so you know what to expect and how to protect your business.
This guide explains:
- How shop policies can help prevent issues
- How to issue refunds
- How PayPal and Stripe handle disputes
Set clear policies to prevent chargebacks
One of the best ways to prevent issues is by clearly displaying your shop policies, including:
- Shipping timelines
- Return policies
- Refund conditions
- Processing times
When customers understand how your shop operates, they’re less likely to file disputes through their bank or payment provider.
Create shop policies
Shops on Gold or Premium plans can create shop policies directly in their Big Cartel admin settings.
Premium users can also create a dedicated page explaining their shop’s refund and shipping terms. Learn how to add custom pages
Issue a refund from your Big Cartel admin
- Go to the Orders page in your Big Cartel admin
- Click the order you want to refund
- Click the three-dot menu in the top corner of the order
- Select Refund
You’ll then be able to:
- Issue a full or partial refund
- Add a refund reason
- Choose whether to notify the customer by email
Refunds can be issued for any amount between $1 and the total order value.
Once the refund is submitted, the transaction will be processed by the payment provider used for that order.
You can also issue refunds directly from your PayPal or Stripe account. Open the order in your Big Cartel admin and click View purchase in Stripe or View in PayPal to access the transaction in your payment processor’s dashboard and issue a full or partial refund. Keep in mind that payment processors may have refund time limits—for example, Stripe cannot process refunds for payments older than 120 days.
How sales tax refunds work (U.S.)
For some U.S. orders, Big Cartel automatically collects and remits sales tax. When a refund is issued, the tax portion of the order is handled slightly differently depending on the payment processor.
Refunds through PayPal
When a full refund is issued through PayPal:
- PayPal pulls the full order amount, including tax, from your PayPal balance.
- Big Cartel then refunds the tax portion back to you, which will appear in your PayPal balance.
Refunds through Stripe
When a refund is issued through Stripe or affiliated payment processors:
- Stripe refunds the order total
- Big Cartel refunds the sales tax portion directly to the customer
This ensures the correct tax amount is returned while keeping your payout balance accurate.
Understanding Chargebacks and Payment Disputes
A chargeback occurs when a customer disputes a payment with their bank or credit card provider instead of requesting a refund directly from the seller.
When a chargeback is filed:
- The customer’s bank temporarily reverses the payment
- The payment processor opens a dispute investigation
- The seller may be asked to submit evidence supporting the transaction
Chargebacks are handled by the payment processor used for the order, such as Stripe or PayPal, and may include additional dispute fees depending on the outcome.
While they don’t happen often, most sellers will encounter a dispute at some point when accepting online payments.
Common reasons customers file chargebacks include:
- Unauthorized or fraudulent transactions
- Item not received
- Item is significantly different from the description
- Billing errors or duplicate charges
Responding quickly and providing clear documentation can improve the chances of resolving a dispute successfully.