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Cancel and refund credit balances

Zuora

Cancel and refund credit balances

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You can reverse a credit balance by canceling or refunding the credit balance. This article explains how to cancel or refund credit balances, including electronic non-referenced refunds, such as a credit card payment.

Cancel credit balances

When you cancel a credit balance:

  • The amount is removed from the credit balance
  • The balance of the negative invoice is reopened.

You must then create a debit memo (adjustment) to handle the negative invoice.

Refund a credit balance

When you refund a credit balance:

  • Zuora refunds the credit balance amount.
  • The invoice balance is not restored.

You can use an external or electronic refund to refund the credit balance. The Credit Balance Refund feature, also known as Non-Referenced Refund feature, is available only if you have enabled the Credit Balance feature. You must create a credit balance to be able to create a refund.

Credit Balance is not a supported object in the advanced custom fields. The custom fields will not show up when you refund a credit balance that has custom fields created through advanced custom fields.

  • You cannot specify values to those custom fields as they would not show up in the UI.
  • If one of the custom fields is marked mandatory, you cannot create a refund.

In such cases, create the refund custom fields through the legacy custom fields feature and then refund the credit balance.

Zuora recommends that you create a process to manage this operation - for example, through accounts payable, or refunding by check with approval.

You can also use the PaymentMethodId field of the Refund object to use the Commerce API when working with electronic credit balance refunds.

Refund a Credit Card Payment: If you want to refund a payment that is processed by a credit card, you must refund the money to the original credit card.

If the original credit card is no longer valid, you can process a refund directly in your gateway to another credit card in the customer account, and at the same time process an external refund in Zuora to restore the invoice balance.

If you do not want to collect the balance in the original invoice again from the customer, you can process an invoice item adjustment to bring the invoice balance to $0. This is the most common practice for this situation.

If you have the Invoice Settlement feature enabled, Credit Balance is no longer supported. So the non-referenced refunds are refunds on credit memos. See Refund Credit Memos for more information on how to refund credit memos.

Note that not all payment gateway integrations support non-referenced refunds. See the Overview article for each payment gateway integration.

Create an external non-referenced refund

  1. Open the customer account detail page.
  2. Scroll down to the Transactions section.
  3. Select the Credit Balance tab. Zuora displays the credit balances created for the customer account.
  4. Click Refund Credit Balance. A page opens for you to enter the refund. 
  5. For the Refund Type field, select External Refund.
  6. Select the refund method that you will use to pay for the refund.  
  7. (Optional): Edit the refund amount. The amount available for refund is displayed by default.
  8. (Optional): Select a reason code for the refund. Reason codes are a way that you can include additional information or business process context on payment operations transactions. This list contains all of the credit balance refund reason codes that are active in your Zuora tenant. See Reason Codes for Payment Operations for more information.  
  9. Click Refund Credit Balance.
  10. (Optional): Enter a reference ID (such as a check number) and comment. Zuora displays a confirmation dialog.
  11. Click Yes to refund the credit balance.

When the credit balance is refunded, Zuora changes the refund status to Processed and displays a Refund page that shows the refund number and related information.

Create an electronic non-referenced refund

In addition to non-referenced external refunds, Zuora supports non-referenced electronic refunds. Non-referenced electronic refunds issue a credit to a customer electronically, without referencing an existing payment in Zuora.

To offer an example, a non-referenced electronic refund might take place as follows:

  1. A customer prepays for a service, and that payment is applied to a credit balance.
  2. You create an invoice for the customer.
  3. The customer uses some of the credit balance and then asks for a refund of the remaining balance.
  4. You can now create a refund and transfer money to the customer.

A user's ability to issue refunds is controlled through user permissions under your Administration settings.

Configure the Electronic Non-Referenced Refund Role

To be able to create electronic non-referenced refunds, you must add the Credit Balance Electronic Refund permission to a new or existing role, and then assign that role to one or more users.

  1. Click your username at the top right and navigate to Administration > Manage User Roles.
  2. Select Payments from the View Role List of list.
  3. Edit an existing role, or create a new role and enable the Credit Balance Electronic Refund permission. If you are creating a new role, enable all permissions that you want the users to have, including the Credit Balance Electronic Refund permission.
  4. Click Save.
  5. Click your username at the top right and navigate to Administration > Manage Users.
  6. Select a user to view the user details.
  7. Click Edit and select the Payments Role that you configured.
  8. Click Save.

Create an electronic non-referenced refund

Creating a non-referenced electronic refund (to refund a credit card payment) is similar to the external refund process described above.

  1. Navigate to the customer account to which you want to give a refund.
  2. On the customer account detail page, select the Credit Balance tab. Zuora displays the credit balances created for the customer account.
  3. Click Refund Credit Balance. A page opens for you to enter the refund. 
  4. For the Refund Type field, select Electronic Refund. 
  5. Select a credit card from the Refund Method list.
  6. (Optional): Edit the refund amount. The amount available for refund is displayed by default.
  7. (Optional): Enter a comment.
  8. (Optional): Select a reason code for the refund. Reason codes are a way that you can include additional information or business process context on payment operations transactions. This list contains all of the credit balance refund reason codes that are active in your Zuora tenant. See Reason Codes for Payment Operations for more information. Zuora displays a confirmation dialog.
  9. Click Yes to refund the credit balance.

When the credit balance is refunded, Zuora changes the refund status to Processed and displays a Refund page that shows the refund number and related information.