Examples of cancelling a subscription and refunding the end customers automatically

Examples of canceling a subscription with different refunds

The following subscription will be used in the examples:

• Subscription Term Type: Termed
• Charge: 1 monthly recurring charge of 100 USD
• Contract Effective Date: 2022-12-01

For simplification, the following table only lists information on the first two billing periods of the subscription.

Billing period	Billing period start date	Billing period end date	Payment
1st	12/01/2022	12/31/2022	$100
2nd	01/01/2022	1/31/2022	$100
Cancel Effective Date	Specific Date: 01/09/2022	Calculated credit memo: $74.2

 

An end customer cancels the subscription by specifying the cancellation effective date as 01/09/2022, which only affects the 2nd billing period and payment. A credit memo is calculated based on the specified cancellation effective date. That is, counting from 01/09/2022, 23 out of 31 days do not need to be paid, and thus $74.2 is calculated as a credit memo.

The end customer can specify a refund amount based on the calculated credit memo $74.2 in different situations, as follows:

Refund 1	Total amount		Amount
Payment	$100	Applied amount	$25.8
Credit Memo	$74.2	Unapplied amount	$0
Invoice	$100	Balance	$0
Refund	$74.2

In refund 1, since the refund amount is $74.2, the same amount will be unapplied from the original payment $100, so the applied amount to the invoice is $25.8. Then the credit memo with the amount $74.2 will be fully applied to the invoice. As a result, the invoice balance is still 0.

Refund 2	Total amount		Amount
Payment	$100	Applied amount	$60
Credit Memo	$74.2	Unapplied amount	$34.2
Invoice	$100	Balance	$0
Refund	$40

In refund 2, the merchant has decided to refund $40.0 to the end customer based on the business policy. Refund 2 differs from refund 1 in that the merchant refunds less than the recommended amount to the end customer, that is, $40.0 instead of $74.2. In this case, $40 will be unapplied from the original payment $100, so the payment amount applied to the invoice becomes $60. To keep the invoice balance to 0,  $40 out of the $74.2 credit memo will be applied to the invoice, the remaining unapplied credit amount is $34.2.

An example of canceling a subscription with a refund and write-off through the REST API

• Subscription Term Type: Termed
• Charge: 1 monthly recurring charge of 100 USD
• Contract Effective Date: 2022-01-01

An invoice has been generated on the Target Date of 2022-11-30. Therefore, 1100 USD has been billed to the end customer. A payment of 1100 USD then has been processed and collected from the customer.

Later, the customer requested to cancel the subscription effective on 2022-04-30, and the agreed amount to be refunded is 800 USD.

Among the 800 USD, 700 USD is for the seven unconsumed subscription periods; the other 100 USD is compensation that is agreed upon between the vendor and the end customer. This 100 USD will need to be written off from the invoice.