Accepting payments online doesn't have to be risky

There’s a way to avoid Shopify’s extra fees when you refund customers or are hit with a chargeback. These fees are frustrating, especially when you’re not making any profit on the sale. But there’s good news.

There’s a setting that will allow you to not get charged by Shopify in these cases. It’s hidden in plain sight on their help documentation on their website. Changing this setting is easy, and doesn’t take more than a few minutes.

No apps or monthly fees required. We’ll show you how to avoid these fees with Shopify’s manual charge processing.

Why am I getting Shopify Payment fees on Chargebacks and Refunds?

Getting fees on non-sale transactions is frustrating

Getting dinged for non-sale transations is frustrating. Shopify Payments processes your customer’s credit card payments for your store. Normally, you won’t see any fees for normal shop activity. But in the case for chargebacks and refunds especially you can get hurt.

The problem you’re experiencing is because your shop is authorizing payments automatically before you have a chance to review your inventory or do a preliminary fraud check.

Under the hood, your Shopify store is authorizing & charging your customers at checkout automatically. But there are benefits to not charging at the time of the sale. I’ll explain why.

What is Credit Card Authorization?

Autorization checks if your customer has enough funds for their purchase.

Authorization is different from capturing payment. Authorization is simply placing a hold on the customer’s credit card on purchase and allows Shopify Payments (or whichever provider you use) to verify the customer has enough funds on their account for the order.

Authorization alone does not charge the customer’s credit card balance - yet.

Holding payments is common in rental type marketplaces. When you book you request an Airbnb for example, you’re not actually charged until the owner of the property accepts your request.

Authorizing your customer’s payments instead of automatically charging on checkout gives you several benefits:

  • Gives you a chance to verify you have the inventory in stock needed to fulfill the customer’s order
  • Allows you to check Shopify’s Anti-Fraud analysis before charging the customer’s credit card and make a decision on wether or not to continue with the order
  • Has the same experience to the end customer, without needing to enter in their card details again once you accept their order

The checkout experience for your end customer is exactly the same. They enter in their credit card details in your Shopify store, and you receive the order alert.

How do I charge an order’s authorized payment in Shopify?

It’s 1 click of a button. Really.

With manual payment processing enabled, after your customer checks out their order, you’ll be able to charge the payment right in the order details page on Shopify:

Watch the screencast below for an example:

If you knew you didn’t have the product variant or product in stock, there is no penalty for removing an authorization. Likewise for orders that are suspcious and you’d like to opt out of fulfilling and avoid the chargeback.

How to enable Manual Payment Capture

It’s easy to switch your Shopify store to using manual payment capture instead of automatic.

Here are the steps:

  1. Login to your Shopify store’s backend
  2. Click the “Settings” button on the lower left hand corner of the screen
  3. Click the “Payments” option
  4. Scroll to the bottom of the page for the “Payment Capture” section
  5. Select the “Manually capture payment for orders” option
  6. Don’t forget to click the “Save” button

Here’s a screencast if you’re a visual learner:

Congrats! Your store is not set to manually capture payments with an authorization step first instead of automatically charging.

Authorizations aren’t forever

Just like all things in life, authorizations will expire. The length of an authorization on a customer’s credit card depends on their issuing bank.

Card Type Authorization period
VISA Up to 30 days
Mastercard Up to 30 days
Discover Up to 10 days
JCD Up to 10 days
American Express 7 days
Diners Club 7 days
China Union Pay 7 days

Read more

  • https://help.shopify.com/en/manual/payments/payment-authorization#set-up-manual-capture-of-credit-card-payments
  • https://help.shopify.com/en/manual/orders/get-paid
Dylan Pierce

Founder

me@dylanjpierce.com

Helping businesses keep what's rightfully theirs by minimizing fraud.