How Refunds Work on Mainstack
This article explains how refunds work on Mainstack, covering topics such as sales tax refunds, transaction fees, partial refunds, and tranche payments, while also addressing common merchant questions.
What Is a Refund?
A refund is the process of returning money to a customer after a transaction has been completed. It reverses all or part of the payment the customer made for a product or service.
On Mainstack:
Refunds are always sent to the same payment method the customer used (e.g., their wallet, card or bank).
Customers always get their product price refunded.
Sales tax (if charged) is always refunded.
Transaction fees (the small fee paid to payment processors) are never refunded, because Mainstack pays them to payment gateways and cannot recover them.
Reasons for Refunds
Refunds may be issued when:
A customer requests one because of product/service dissatisfaction, errors, or coverage by your policy.
A merchant cancels an order or offers a goodwill refund.
A product or service was not delivered as expected.
Refunds help maintain a great customer experience and can often prevent complaints or negative feedback.
How to Issue a Refund
You can refund customers in two simple ways:
1. Via the Transactions Dashboard
Go to your Mainstack Dashboard.
Click on your balance in the top right corner of your dashboard
Click on “View All Transactions”
Search for the transaction either by name or email
Click on the transaction
Click on refund
Confirm the transaction reference, refund amount, and reason for refund
Click on “Process Refund”
2. Via the Refund dashboard
Navigate to your dashboard (Storefront, Bookings, Invoicing, Hosted Courses).
Click on More at the top right corner
Click on Refund
Click on Log a refund.
Provide the transaction details and
Click on Process refund
Both methods automatically process the refund to the customer’s payment method.
Sales Tax and Transaction Fee Refunds
Every payment may include two charges:
Sales Tax (collected by Mainstack where required by law).
Transaction Fees (charged by payment processors).
These can be paid by the customer, the merchant, or split between both. The refund logic ensures:
Customers always receive their full product price back (for full refunds).
Mainstack always refunds sales tax to either the Merchant or the Customer, depending on who bore the cost.
Transaction fees are not refunded since they are paid to payment processors and not returned to Mainstack. The cost is absorbed either by the customer or merchant, depending on the account setup.
Refund Scenarios (with Examples)
Here’s how refunds work in common situations:
When the Customer Pays Both Sales Tax and Transaction Fee: The Customer receives their product price + sales tax. The transaction fee is not refunded, so the customer bears the loss.
Example: Product price = $100, Sales Tax = $10, Transaction Fee = $2.
The customer pays $112 in total.
If refunded, they get back $110 (product + tax).
The $2 fee is not refunded → customer bears the loss.
When the Merchant Pays Both Sales Tax and Transaction Fee: The customer receives their full product price, and the transaction fee is deducted from the merchant’s wallet, so the merchant bears the loss.
Example: Product price = $100, Sales Tax = $10, Transaction Fee = $2.
The customer pays only $100.
The merchant receives $88 after fees and tax is deducted.
If refunded, the customer gets back $100 (product price).
The merchant loses the $12 (sales tax + transaction fee).
Split Charges:
If the customer pays sales tax and the merchant pays transaction fees: Customer gets product price + sales tax refunded, and the merchant absorbs the transaction fee.
Example: Product price = $100, Sales Tax = $10, Transaction Fee = $2.
The customer pays $110 (covers tax, not fee).
The merchant gets $108 after fee deduction.
If refunded, the customer gets back $110 (product + tax).
The merchant loses the $2 transaction fee.
If the merchant pays sales tax and the customer pays transaction fees: Customer gets the product price + sales tax refunded, and the customer bears the transaction fee loss.
Example: Product = $100, Sales Tax = $10, Transaction Fee = $2.
Customer pays $102 (covers fee, not tax).
The merchant gets $90 after tax deduction.
If refunded, the customer gets back $100 (product price - fees).
The merchant loses the $10 sales tax
Partial Refunds
Via both the Refund Tab and Transaction Dashboard.
For courses, merchants should also adjust access rights (e.g., revoke course access, subscription time).
Sales tax is refunded proportionally to the portion of the partial amount being refunded (where sales tax is applicable).
Refund totals are automatically calculated in real time to ensure accuracy.
Example:
Product price = $100, Sales tax = $10, Total = $110.
If refund = $50 (half the price), sales tax refunded = $5.
The customer receives $55 in total.
Tranche Payment Refunds
For payments made in tranches (installments):
Refunds can only be issued per tranche, not across the full payment plan at once.
Sales tax and transaction fees apply per tranche, in the same way as a single payment.
Each refunded tranche follows the same logic outlined above.
Refund Processing Time
Refunds are typically processed immediately, but may take up to 7–10 business days to appear in the customer’s account, depending on their bank or card provider.
Both the merchant and the customer receive confirmation emails once a refund is initiated.
Merchants can cancel a refund request within 5 minutes of submitting it.
Refund Transparency
To improve clarity, Mainstack now provides a refund breakdown before you process it.
This shows:
The amount the customer will receive.
The portion refunded by Mainstack (e.g., sales tax).
Any amount deducted from the merchant (e.g., transaction fees).
This transparency helps merchants avoid misunderstandings and unnecessary questions.
Important Notes
If you’ve already fulfilled an order or granted course access, revoke access or communicate with the customer accordingly.
For GHS and KES refunds, please contact support.
Mainstack currently supports sales tax collection in:
UK
Canada)
Texas (US)
Maryland (US)
Best Practices
Show your refund policy before purchase so customers know what to expect.
Process refunds quickly to build trust and reduce disputes.
Explain partial refunds clearly to customers.
Remember: transaction fees are never refunded.
For more information on our refund rules and policies, please review our Terms & Conditions.
Q: Will my customer always get their full money back?
Customers always get their product price refunded. Sales tax is also refunded. The only amount not refunded is the transaction fee, which may be absorbed by either the merchant or the customer, depending on your account setup.
Q: Why can’t transaction fees be refunded?
Transaction fees go directly to payment processors. They don’t refund them to Mainstack, so we can’t pass them back to you.
Q: How does sales tax work in partial refunds?
Sales tax is refunded in proportion to the amount of the product price being refunded. Example: if you refund 50% of the product price, 50% of the tax is refunded.
Q: Can I refund just one installment from a payment plan?
Yes. Each installment (tranche) can be refunded separately. The same refund rules for sales tax and transaction fees apply.
Q: How long before my customer sees their refund?
Refunds are instant on our side, but banks and card providers can take up to 7–10 business days to credit the money in the customer’s account.
Q: Can I cancel a refund after sending it?
Yes, but only within the first 5 minutes. After that, the refund is locked and will be processed.
Q: What happens if I forget to revoke product access after a refund?
Refunds don’t automatically remove access. You should revoke access to products, courses, or services yourself to avoid giving free access.
Need Help?
Still need assistance? Contact our support team anytime; we’re here to help.
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