How do I create a refund in UI and API (including shutting off a subscription)?

Overview

Creating a refund in Zuora is quite straightforward. This article also examines a common use case for a refund: early cancellation of a subscription.

In a Zuora context, a refund is used to return already paid monies back to the customer. The reasons for doing this are really business specific but classic examples would be returning funds due to overpayment, or deciding to refund money due to customer dis-satisfaction of some kind.

Note that refunds imply that money has been returned to customers, you should use adjustments (credit memos) if you are issuing credit to customers but are not returning funds to a customer. This is why refunds must be applied against a previous payment and cannot exceed the payment amount.

Solution

Creating a refund is quite straightforward using either the UI or the API. Like Payments, there are two types of Refunds, Electronic and External. But the key thing to remember about Zuora refunds is that you can only refund against a prior Zuora payment - so specifying a prior Zuora payment is mandatory when creating a Zuora refund. These are also sometimes known as referenced payments. Should you need to adjust an account balance without a suitable payment to refund you should use an invoice item adjustment instead.

Electronic refunds are partners to a prior electronic payment - an electronic payment being the Zuora term for a payment collected by Zuora using the built-in Zuora Payment Gateway integration. In practical terms this usually means a credit card, debit card or ACH payment that was processed by Zuora. Zuora offers the option of specifying that the refund associated with any particular electronic payment be refunded to that same electronic payment method, hence the term "Electronic Refund."

You are not required to use an electronic refund for an electronic payment, even if the payment was on a credit card. You can specify an external refund instead. An external refund is simply a record in Zuora of a refund that has been or will be made using an external to Zuora refund process. For example, cutting a check and mailing that to your customer should be entered in Zuora as an External Refund. External refunds can give you greater flexibility in how you deliver the refund, whereas electronic refunds will be processed upon creation.

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