[New] Square Refund Policy Update

Hi Sellers! 👋


We wanted to inform you of an upcoming change to Square’s refund policy which will be effective as of April 11, 2023. 


Occasionally, we update our policies and pricing for our products to better align to evolving costs from our network and payments partners. In these scenarios, we make pricing changes so that we can invest in our platform, create new features, and continue expanding the value Square provides to sellers like you.  


Processing fees will no longer be refunded to your account when you issue full or partial refunds to your customers.


We are making this change to reflect that Square incurs processing fees from our network and payments partners in instances of refunds, and to match current industry standards. You do not need to take any action and there will be no change in the experience for your customer. 


You may wish to update your return policy for your customers in order to account for this policy change. We recommend visiting our Return Policy Guide & Templates for guidance on how to create a return policy that works best for your business. You can also find additional information on the refund process through Square by visiting our Help Center


In addition, we've modified language in our taxes and indemnities provisions in the Square General Terms of Service and Square Payment Terms related to our legal obligations.


Read more about the upcoming pricing and policy changes here ›


Thank you for selling with Square.

Square Champion

My question is we are having huge lags within our inventory where an item will be out of stock and yet it's allowed to go negative- forcing us to refund the client. I don't feel like we should be liable for paying double fees when the oversell is due to Square.

Square Community Moderator

Hey there @DinaLRosenberg this is really great feedback and I completely understand the predicament here. I will make sure this review is passed along to management so they are aware of the effects these changes have. I appreciate you for reaching out and sticking with us through these changes! 

Square Champion

I think this is great feedback and a real world example of how a policy change impacts us specifically.  I would like to chime in and say that maybe a good compromise would be an allowance each month for the one off refunds that fall into a category like this.  Or a monetary allowance for refunded fees, but that preserves the spirit of the policy change without penalizing sellers.


I don't like the term industry standard in this case myself, but I get it.  If 90% of the market share is doing it, it is no longer a differentiator.

Beta Member

We process hundreds of online orders a month with an average price of $300. Some customers place their order and will later reach out to cancel their order for whatever reason. Are we still going to be charged for orders that aren't fulfilled and shipped? 

I use square for my Glamping tent rental bussiness, each booking has a security bond of $150 that I refund once I have collected all of the equipment. This charge is going to be huge for me as it applies to each booking. My only other option is to ask people for their bank account details and refund them directly... but this will be time consuming for the guest and myself, is there another way to collect a security bond?

Square Champion

@PFGlamping The simple way to fix this for you is to add 5$ to the price of your rental to cover the 5$ cost to refund the $150.


I am by all means not getting into the decision by square, but in your case where you are always doing a refund this is the minimum I would do.  Otherwise I would just put it as a $150.00 deposit but just say there is a 5$ non-refundable fee if using a credit card for the deposit.


I focus more on things I can control than the ones I can't.

Square Champion

@Richmenlooks Short answer from what I understand is yes.  As I have said to someone else, I would just change your policy that cancellations will be refunded less a %5 restocking fee/return fee etc.  In your case, a 300$ order online is about 9$ exactly, and to me that is not a trivial amount to be taking on.  I do know that alot of companies don't actually charge the card till the order is shipped.  I would like to see square for situations like yours allow the pre-auth/hold and then release when the order is fulfilled so you could avoid this fee.  If the person is a good customer you can always choose to waive the fee, but if they order and just cancel they probably aren't going to buy anyway.


Square Champion

I closed my shopify account for this exact policy. Square should consider how much they take from users already in subscription fees and user fees and balance that with how many outstanding issues and features have not yet been implemented or addressed.


1: I pay a fee for debit

2: I pay a fee for credit

3: I pay a fee for hardware

4: I pay a fee for accepting and doing my own deliveries

5: I pay for web hosting services

6: I pay for addons


At a certain point, using square with integrated payments is going to become more costly than using 3rd party, If square was in financial trouble I could perhaps see this as justified, but they are not and it feels like a money grab

Typically we catch refunds before the transfer takes place, which would seemingly avoid the costs Square says it is trying to avoid eating. Will the new policy affect these too, or only once the transfer has taken place? Thanks.

Beta Member

We have a lot of customers that have ordered things that are on backorder and have been waiting for some time for the vendors to catch up with inventory. Some of these orders are from last year, still within the time we can issue a refund back to a credit card. If a customer choses to cancel their order because of the wait time, it was never an issue because we were able to recover the whole transaction but now if we cancel one we are out the fee which can be hundreds of dollars. We have since changed our policy that our customers will get a refund minus the processing fee which as a courtesy can be placed on a gift card, customer service of course. But we have customers that are miffed because when they first placed the order, they were told they could get a full refund. We never thought Square would change their policy and the main reason we stuck with Square in the first place. Why should we take a hit on these orders because Square decided to change their policy? I asked support if we can get the fees returned for sales prior to the policy change and they simply said no. Bad customer service, just leaving us high and dry. I am just waiting for a customer to dispute the charges and we get a chargeback. I hope Square has my back since they are the ones that suggested offering gift cards as a new refund policy or in that situation, help us out by refunding the fee so we can offer the customer a full refund. What kind of protection do we have from chargebacks is what I really want to know. 

This is Hugely disappointing.  Your policy of refunding service fees is why I've always favored square over paypal and other selling platforms - you all were the "good guys".  Now there is no distinct advantage of using Square.  I sell products for $3000 and sometimes customers back out before delivery.  The "good" feeling I've always had about square just evaporated.  so bummed.

Beta Member

This is extremely disappointing 😞

Beta Member

We have this issue constantly 1000%, this is a serious problem and now it seems that square wants to charge us extra for the inadequacies in their product development 🤬

Yeah just a money grab. I rent out equipment and need a deposit of 10,000$. and because square isnt advanced enough to do authorizations instead of full transactions so this will cost me $300 in fees per customers. and about $9000 a month, $108,000 in extra processing fees. So i will be switching to someone not interested in money grabbing and have authorizations instead of full transactions. 

The explanation also mentioned to "keep up with industry standards" then why not keep up with the industry and allow authorizations and how about not charging the profit which you make off the transaction for refunds. Pretty much take fees where ever you can is what probably what should be said here.

The day this changed, we were flooded with a bunch of ~100$ transactions with stolen credit card. Its like dark web heard of the policy change and wanted to see if square businesses would risk the shipping to not just blanket cancel stuff and be forced to eat the fees for cancelling the sale. Brutal. 

Square Community Moderator

Hi @BodegaCards - Thanks for following up on this thread. I'm very sorry to hear about your experience 😞 I can certainly provide some more info on this.

When a payment is disputed and Square identifies the payment as fraudulent,  Square will initiate a refund and cover the processing fees. If you aren't using it already, I'd also recommend enrolling in Risk Manager, which is a free service that can help prevent fraudulent transactions in the future.

I hope this information is helpful but please do let me know if you have any additional questions.

Similar Threads
[Roundup] 🌦April 2023🌦 Product Updates and New Features
[New] Tap to Pay on Android
[Improvement] Announcing Some Exciting Updates to the Payment Methods Report
[New] Square Refund Policy Update