How to handle partial refunds

Unlike a credit card charge, a SNAP or EBT charge is immediate at checkout.

You need to process partial refunds any time the total charge is reduced after checkout. This includes any changes during or after fulfillment.

Read this guide if you’re building with Custom Checkout or the Forage JS SDK. You’ll learn:

• When to issue partial refunds
• What FNS requirements apply to partial refunds
• How to implement partial refunds

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For information on processing full instead of partial refunds, or for specific refund-related example API requests, refer to the Query the Forage API to issue refunds guide.

When to issue partial refunds

Item substitutions

An item substitution is when a lower-cost alternative replaces an item in the original order. A customer might initiate the substitution, or a retailer or delivery shopper might make the swap when they discover a price discrepancy, an inventory error, or that the item is out of stock. Weighted items can also result in item substitutions. If the fulfilled weight is lower than the ordered weight, then the difference may result in a refund.

Item removals

An item removal is when an item is removed from the order. A customer might remove it while the order is being fulfilled, or a retailer or delivery shopper might opt to remove an item if there’s no adequate substitute, or if the retailer doesn’t support substitutions.

Item returns

A customer might initiate a return if an item is expired or otherwise unsatisfactory.

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Other side effects of partial refunds

If a retailer offers any promotions that depend on the total order charge, like free shipping or delivery after a certain amount, then a partial refund might affect a customer’s offer eligibility. For the best customer experience, it’s recommended to honor the original promotion, despite any partial reduction in the total order charge.

FNS requirements for partial refunds

Partial refunds must comply with the following FNS requirements.

Deadlines

Partial refunds due to retailer error, like overestimated weighted products, out of stock items, or substitutions must be processed at or immediately after order fulfillment.

Customer-requested refunds must be processed within two business days after the item is returned.

Partial refund entry

Every retailer must have a secure method for authorized employees, using password protected user IDs, to manually enter partial refund requests.

Digital receipts

Digital receipts for partial refunds must be provided to a customer within 24 hours, or the retailer must retain digital copies of the customer’s order history. The receipt must detail the same information that is required for original order receipts, including, at a minimum:

• Date issued
• Item details
• Merchant name/logo
• Order number
• Remaining SNAP balance after the transaction
• Transaction type and amount (e.g. SNAP refund: $16.56)
• Truncated EBT card number

Payment instruments

As in the original order purchase, multiple payment instruments, including EBT Cash, SNAP, and a credit/debit card might be involved in a partial refund. FNS outlines specific requirements per payment instrument, detailed in the sections below.

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Summary of FNS payment instrument requirements

• SNAP ineligible items can never be refunded to SNAP.
• EBT Cash ineligible items can never be refunded to EBT Cash.
• Never refund more to a specific payment method than it was originally charged.

SNAP

SNAP is a form of payment that can only be used to buy eligible food items. SNAP purchases are tax-exempt. SNAP can’t be used to cover shipping, delivery, or other service fees. It also can’t be used to purchase any ineligible items.

Partial refunds on SNAP purchases must be reimbursed to a customer’s SNAP balance. To protect against fraud, no other payment instrument can receive the reimbursement. Refunds from SNAP to credit/debit, EBT Cash, or store gift cards are prohibited.

Only SNAP eligible purchases can be refunded to SNAP. For example, refunding an alcoholic item should never result in a SNAP refund.

EBT Cash

EBT Cash is a form of payment that can be used to buy eligible living expenses. It can be used to buy household goods and also for shipping, delivery, or other service fees.

Only EBT Cash eligible purchases can be refunded to EBT Cash. For example, refunding an alcoholic item should never result in an EBT Cash refund.

Credit/debit cards

If a customer’s total order exceeds the applied SNAP/EBT credit, then a credit/debit card can be used as an additional payment method. Credit/debit cards might also be used to pay for SNAP/EBT ineligible items, fees or tips.

How to implement partial refunds

The first step in implementing partial refunds is deciding whether to prioritize the customer experience or the engineering cost and time to launch.

A return might include a mix of SNAP and/or EBT Cash eligible and ineligible items. A customer might have paid using a mix of SNAP, EBT Cash, and credit/debit card. To calculate an optimal partial refund for a customer, your app should analyze the distribution of funds across payment instruments. However, this isn't required, and it’s faster to implement partial refunds based on the payment split from the original order.

Example scenario

Consider the following order receipt. "SP" indicates that an item is SNAP eligible. "EBT" indicates EBT Cash eligible:

To consider the different post-refund implementation options in a concrete scenario, pretend the customer returns Item A. The preferred customer experience results in a $9.90 credit card refund. The faster option refunds $10 to the customer’s SNAP balance. Read on for details.

How to implement partial refunds that prioritize the customer experience

If a mix of payment instruments is used to pay for eligible items, then during a partial refund it’s possible to redistribute the payment split. Items with higher tax rates can be refunded to SNAP first to minimize a customer’s taxes and maximize their credit/debit card refund.

While EBT customers prefer this experience, implementing it is a heavy engineering lift that can add weeks to launch time. It can also complicate auditing work for finance and accounting teams.

Implementation steps

Step 1: Calculate the updated order total

Subtract the cost of the returned item from the original order total.

In the scenario, you’d deduct the $10.00 value of Item A from the $60.00 order total. This results in an updated order total of $50.00.

Step 2: Sort any remaining SNAP eligible items by highest tax rate

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This step isn’t required for FNS compliance, but it makes for a better customer experience.

If SNAP-paid items are returned, then the SNAP credit can be redistributed among any remaining SNAP eligible order items. To maximize a customer’s potential credit/debit card return, apply the SNAP credit to the highest-taxed items first.

In the scenario, after removing Item A, two SNAP eligible items are in the cart:

• Item C: $10.00, Tax 1%
• Item B: $10.00, Tax 0%

Item C has a higher tax rate, so it’s sorted above Item B.

Step 3: Apply SNAP credit to SNAP eligible items

Apply all of the returned SNAP credit to the remaining SNAP eligible items in the cart, starting with the highest-taxed items. If the credit exceeds the value of the remaining SNAP eligible items, then return the excess SNAP amount to the customer’s SNAP balance.

In the scenario, the return of Item A restores $10.00 in SNAP credit. That $10.00 is applied in full to Item C, because its tax rate is higher than Item B’s.

Step 4: Distribute the original EBT Cash charge

The original EBT Cash payment can be applied to any remaining SNAP eligible and EBT Cash eligible items. The order of the items doesn’t matter: unlike SNAP purchases, EBT Cash purchases are taxed. If the original EBT Cash payment is greater than the cost of the remaining eligible items, then refund the difference to the customer’s EBT Cash account balance.

In the scenario, the customer paid $5.05 in EBT Cash. Because the order of the items doesn’t matter, that $5.05 is applied in full to the original Item D.

Step 5: Apply the original credit/debit card payment to outstanding items and fees

Apply the original credit/debit card payment to any outstanding items and fees. If the credit/debit card payment exceeds the cost of the outstanding items, then refund the difference to the customer’s credit/debit card account balance. If the cost of the outstanding items exceeds the original credit/debit card payment, then create a new order and charge the customer the difference.

In the scenario, the following items remain in the cart:

• Item B: $10.00, Tax 0%
• Item E: $25.00
  • Plus 1% tax: $25.25

The original $45.35 credit/debit card payment is applied to the outstanding $35.20 total. The remaining $9.90 is refunded to the credit/debit card.

How to implement partial refunds that minimize engineering costs and time to launch

The fastest way to implement partial refunds is to reimburse the customer according to the original payment split at checkout.

While this is also the easiest implementation option for finance and accounting to audit, this approach could result in a SNAP/EBT refund rather than an eligible credit/debit card refund. Credit/debit cards, unlike SNAP/EBT Cash, can be used for any expenses, so optimizing for this refund first is the preferred customer experience.

Implementation steps

Step 1: Refund the return according to the original payment split

In the example scenario, the return of Item A restores $10 to the customer’s SNAP balance.

If the customer decides to also return Item B, then $10 is refunded to the credit card balance. Returning Item D results in a $5.05 refund to the customer’s EBT Cash account.