One of the stores with our app installed had their subscription frozen due to a past due invoice. They asked for a refund so we issued an App Credit to cover it, but because the credit was sent after Shopify invoiced the customer, it didn’t cancel out the charge. We can’t refund it since it hasn’t been paid and is frozen.
Normally, we’d ask Shopify to manually apply the credit to the outstanding invoice, but in this case, multiple attempts and weeks of back and forth haven’t resolved the issue. The store remains frozen.
Our workaround for now is to ask Shopify to cancel the pending invoice directly when we can’t issue a refund. But relying on that instead of simply applying a credit feels inefficient and unreliable, and often takes several weeks to resolve.
Has anyone else dealt with this? How do you handle applying credits to invoices for frozen stores? Any advice or improvements you’d suggest? Thanks in advance for your help!
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Hey @paustin,
Thanks for posting this here! Reading over your post, I do have a few questions.
I’m curious to know more about the scenario where you’re approving a refund for an unpaid invoice?
The reason I ask is because a payout is only issued once the merchant has paid their invoice. So if a merchants account is frozen for non-payment, you haven’t been paid yet for the charge they want refunded.
Issuing a credit or requesting the charge to be removed from the invoice doesn’t uninstall the app, so once the merchant does reactivate, then the current billing cycle would be free for them.
Additionally, if you have issued a credit and they never re-activate, then I suspect you would then be out of those funds as credits are deducted from your payout at the time you issue the credit.
The best option as I see it would be to only refund or offer credits to charges where you’ve already been paid. Then let the merchant know that you’ll refund or offer a credit once they have reactivated their plan.
Hi Kyle,
Thanks for the reply — really appreciate you taking the time to lay this out. You make great points about the potential net negative outcomes for us.
That said, we often hear from merchants who are extremely frustrated that we can’t resolve the issue more cleanly — specifically, that they have to pay a charge before it can be refunded or credited back. From their perspective, it’s a difficult pill to swallow, especially when their store is frozen and they’re trying to get back on track.
Please correct me, but as far as we can tell, there’s no mechanism available to reverse or cancel an unpaid app charge on our side. If that’s the case, maybe it’s simply a limitation we have to accept — but unfortunately, it tends to affect some of our most frustrated and vocal users.
Thanks again for the insight.