How ReturnZap handles Shopify returns processing
What is Shopify returns processing?
On July 1st 2025 Shopify changed the default behavior for returns. Previously, returns were recorded against the Shopify sales ledger immediately after creation. This caused numerous challenges with accurate reporting and returns reconciliation.
For a full breakdown of the impact of the old Shopify default bahvior, see our article on Shopify returns reporting
As of July 1st 2025, Shopify will instead record returns against the Shopify sales ledger only when they are marked as processed in Shopify.
Processing a return "commits" it to the Shopify order ledger. This means that any expected refunds or additional revenue from exchange items will be added to the Shopify order as soon as the return is processed. This is the case even if the refund has not yet been issued or if additional funds have not been collected.
Processing a return does not impact your actual Shopify payout. That is only impacted by cash refunded to or received from customers. But it does impact overall sales reporting.
The timing and impact on order balances can get complicated. But ReturnZap manages this complexity and will continue to streamline the returns flow for Shopify merchants.
Order page impact in Shopify
Returns which have not yet been processed in ReturnZap will display on the Shopify order page but will be in an "unprocessed" state.
These returns will not impact the order balance until they are processed. Shopify will display an alert to this effect.
No action needs to be taken on the order page. All actions will continue to happen within ReturnZap.
How does this impact ReturnZap returns?
Returns will continue to function as before within ReturnZap. The only visible outcome of these changes will be in Shopify reporting and the timing of return deductions.
The end result is that Shopify reporting will be much more accurate and will not overstate your total returns.
| Scenario | Before July 1 2025 | After July 1 2025 |
| Return for refund | Return is registered against the Shopify ledger immediately after it is created | Return is registered against the Shopify ledger only when it is refunded |
| Return for refund which is never sent back by the customer | Return remains pending in Shopify indefinitely, until is it manually deleted or expired by ReturnZap (if configured) | Return shows as unprocessed in Shopify and does not impact the ledger or sales reporting |
| Return for exchange - Draft order method | Return registered against Shopify ledger immediately, causing "refund owed" balance to display and reduce sales | Return item remains unprocessed in Shopify and does not impact the ledger or sales reporting. Exchange items are created via draft order |
| Return for exchange - Original order method | Exchange items are added to the original order, offsetting any returned items. No "refund owed" balance is displayed. | No changes to returns reporting. Slight changes to fulfillment flows which will be managed by ReturnZap |
| Return for Store Credit - Discount Code or Gift Card Method | Return registered against Shopify ledger immediately, causing "refund owed" balance to display and reduce sales even after store credit is issued. | Return item remains unprocessed in Shopify and does not impact the ledger or sales reporting. Store credit is created using discount codes or gift cards as before. |
| Return for Store Credit - Shopify Account Credit | Return registered against Shopify ledger immediately, causing "refund owed" balance to display and reduce sales even after store credit is issued. | Return is registered against the Shopify ledger only when it is credited. Store credit issued will display against the order page in Shopify. |
When does ReturnZap mark a return as processed in Shopify?
When a return contains only items for refund
Return items will be processed in Shopify and committed to the sales ledger as soon as refunds are issued in ReturnZap.
When a return contains only items for store credit
If using Shopify Account Credit: Return items will be processed in Shopify and committed to the sales ledger as soon as credit is issued
If using Gift Cards or Discount Codes: Returns items will remain unprocessed and no "refund owed" balance will display on the order page. Gift cards and discount codes will continue to function as normal.
When a return contains only items for exchange
If using exchanges on the original order: Return items will be processed as they are actioned. Exchange items will process when the action to Release Exchanges is taken in ReturnZap. Return lines which result in partial refunds will be processed when the action to Issue Refunds is taken in ReturnZap.
If using draft order exchanges: Returns items will remain unprocessed and no "refund owed" balance will display on the order page
When a return contains a mix of items for refund / store credit and exchange
ReturnZap will process each return line item according to the logic described above. However, they are certain scenarios which will cause automatically cause return line items to be marked as processed by ReturnZap:
- When a return for exchange results in a balance owed on the order. In this case, ReturnZap will immediately process the return at the time of creation.
- When a return contains a mix of items for refund and exchange. If the action to Issue Refunds is taken first in ReturnZap, ReturnZap will automatically process all associated exchange items and add on items to ensure an accurate order balance.