To offset the costs of shipping and processing returned items, Shopify and Custom API merchants have the option to enable unique processing fees for refunded items. This is the only way — other than shoppers paying for their own shipping label — to collect fees from your shoppers to cover costs of returns. 

Processing fees are based on the order currency (if your shop uses USD, then the processing fees will be in USD). There are several ways to set your processing fees for refunded items.

1. Start by determining if you’re going to charge your processing fees for your store per item or per return. You can only choose one of these, not both.  

2. Determine which drop-off methods you’d like to charge processing fees for, and what amount you’d like to collect for each of those methods. You can set unique processing fees for:

   • Returns by mail

     • Prepaid label provided by merchant (most popular) 

     • Shopper purchases their own label

   • Return Bar returns

   • Return to your store

3. For mail returns, you can customize further, by setting processing fees by shipping zones 

Processing fees only apply to refunds to original payment methods and generally do not apply to exchanges, gift cards, gift returns, or Returnless Items. The one exception is if your store offers only gift cards as its single return option. If your store offers only gift cards (no refunds nor exchanges), then Happy Returns can enable processing fees for your gift card returns. See the FAQs for more information.

Shopper experience

When a shopper starts a return in the Return & Exchange Portal, the total processing fees are calculated using your processing fee configurations (and applied in the original order currency), and are displayed next to each of the available return methods on the return method selection page. 

After a return method is selected, the shopper will see their refund details on the Return Preview screen, which will include the processing fee deduction from their refund total.

In the case that your shopper ultimately uses a return method different from the one they originally selected, the processing fee will be recalculated and deducted based on the actual return method used by the shopper. 

To get started with using processing fees, you must contact a Happy Returns team member to enable this feature for your shop and set up processing fees. 

Have the following details ready when contacting us: 

• Whether you want processing fees per item or per return

• Processing fee amounts for each return method (Return Bar returns, return to store) 

For prepaid label mail returns, follow the instructions below to set and update processing fees across your shipping zones once processing fees are enabled per item or return.

Once per-item or per-return processing fees have been enabled for your shop, you have the option of setting processing fees for your distinct shipping zones. To learn more about setting shipping zones for your shop, visit our Shipping Zone support page.

1. Find the shipping zone for which you want to apply processing fees on Dashboard > Settings > Shipping Zones

2. Click the three dots next to the shipping zone name and select “Edit”

3. At the bottom of the Manage Shipping Zone page, find the section titled Processing Fee

4. Click the toggle to enable processing fees for this shipping zone

5. Set a processing Fee Amount. This will be the amount charged on a per-item or per-return basis — depending on how it was previously configured — for each mail return

   1. Applies To will automatically be set to Mail Returns and cannot be changed to other return methods

6. Click Save to apply your changes

7. Follow steps 1 through 6 for each shipping zone

Here are some limitations you should be aware of when considering using processing fees:

• Processing fees can only be set up as per item or per return for your entire shop, not both

• All processing fees can be no more granular than by country

• Processing fee updates are not retroactive and will only apply to new returns, not returns that have already been completed or started (unless the return method is changed)

Processing fees can be waived directly in your retailer dashboard or on Shopify at the order and customer level. Click here for more information on how to waive processing fees.