PayPal Returns: What is the Process?

Samuel Clennett

If you shop online with PayPal, you’ll be glad to know that there is a service to allow you to reclaim some of the costs of postage if you need to return goods. Of course, terms, conditions, and limits apply - but the PayPal Refunded Returns program is designed to offer peace of mind when shopping with ecommerce stores.

This guide walks through the process for using PayPal to pay for, and return goods online.

We’ll also take a quick look at an alternative way to pay when you’re shopping with ecommerce retailers based overseas. Getting a free multi-currency account with Wise could save you money, as you’ll be able to convert your funds to the currency you need using the mid-market exchange rate. That means you avoid PayPal’s currency conversion fee. More on that coming right up.

Paying with PayPal

To get started with PayPal you’ll need to set up your account, and link it to your preferred payment methods, such as your regular bank account, debit card or credit card. You can add multiple payment sources if you’d like to¹.

After your PayPal account is verified, you’re ready to get started shopping online with PayPal².

One of the big advantages of using PayPal for online shopping is that you won’t need to enter your bank or card details to complete your purchase. All you need to do is select PayPal when you get to the checkout. You’ll be taken to the PayPal log in screen, where you’re asked to enter your email and password, or mobile number and PIN.

Once you’re in your PayPal account you can select which of your chosen payment methods you want to use - linked bank account, credit or debit card, or PayPal balance - and complete the purchase. You’ll usually be taken back to the merchant site once the PayPal transaction is completed, and should receive an emailed receipt and confirmation from both the retailer and PayPal.

Paying with PayPal - don’t get surprised by extra fees

Before we go any further it’s worth highlighting the potential costs of shopping online with PayPal.

Shopping with retailers based in Australia should not incur any fee. However, if you’re shopping with a provider based overseas - or need currency conversion for any other reason, you’ll pay a currency conversion fee of 3%-4% on each transaction.

Switching the money within your account before you spend comes with a charge of 3%, while shopping with AUD and allowing PayPal to automatically convert the funds upon purchase leads to a fee of 4%³.

PayPal Returns

Of course, one of the common issues with online shopping is that the goods are bought unseen. If an item arrives and it isn’t what you expected - maybe the size is wrong, the product doesn’t look the same as it did online, or you have just decided against the purchase - you’ll need to return it. Many online stores offer free returns - but if your chosen retailer does not, you’re then saddled with paying the return postage fees - which may even cost more than the item itself.

This is where PayPal’s Refunded Returns program comes in⁴.

PayPal’s Refunded Returns may mean you’re entitled to reclaim the cost of returning goods bought through PayPal, as long as they fit the eligibility criteria. To submit a claim, your purchase must be⁵:

  • Tangible goods which have actually been shipped to you - no digital products
  • Shipped to an address in Australia, and purchased using an Australian PayPal account which is in good standing
  • Fully paid for using PayPal
  • Accepted for return by the retailer
  • Not covered by a free returns policy from the seller

If your products fit these criteria, you can activate Refunded Returns online within your PayPal account, find the original transaction in which you made the purchase, and then submit proof of the return to request a refund. You can request up to 8 refunds per year, with a cap of AUD45 for each transaction you claim on.

Before you send your products for return, make sure you read the terms and conditions for this service carefully. To prove you made the return shipment, you’ll be asked to provide a tracking number for the parcel, or else a receipt for the shipping fee. If the shipping fee doesn’t include the address of the seller, you’ll need to take a photo of the parcel before it’s shipped to show the address.


To be eligible for a refund of your shipping costs, you must submit your claim to PayPal within 30 days of the return, and no more than 150 days from the actual purchase date. PayPal states you receive your refund in 5 business days, subject to approval of your claim.

Other Options for Paying

While shopping online with PayPal is convenient, it’s not your only option. And if you’re spending money with retailers based overseas, the PayPal currency conversion fee can push up the costs more than you expect.

One smart alternative if you’re spending money online with a retailer based abroad is to use Wise. Grab yourself a free online multi-currency account and Platinum debit Mastercard and you can spend your funds anywhere you like, with all currency conversion done using the mid-market exchange rate with no markup.

Just top up your account using dollars, switch to the currency you need for a low, transparent fee, and avoid exchange rate markups entirely.

You’ll also be able to avoid using PayPal when shopping online by choosing to use your regular debit or credit card instead, or a different digital wallet like Apple Pay. Usually the exchange rates set by major card networks like Visa and Mastercard are fair, although there will typically be a fee somewhere along the line for foreign purchases. If you choose to use a credit card, don’t forget to check if there are any extra charges when spending with overseas retailers.

PayPal offers great services for account holders, and the free return shipping can be an extra reassurance if you’re not sure about online shopping. However, not all purchases are covered by the Refunded Returns program, and there are strict rules about how to claim and receive a refund. Read all the rules before you attempt to make a claim so you don’t get caught out.

And if you’re planning on shopping online with overseas retailers, don’t forget to take a look at alternative ways to cut your costs. Using a foreign currency account from Wise can mean you pay less to convert your currencies - leaving you more to spend on yourself.


  1. Paypal Australia
  2. Paypal - Paying Online
  3. Paypal - Fees
  4. Paypal - Returns
  5. Paypal - General Conditions

All sources accurate as of 18 August 2020

This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from Wise Payments Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.

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