Let’s be honest, refunds are one of the trickiest parts of running an e-commerce business. They’re not fun, they don’t drive revenue, and they’re often the point where you lose hard-won customers.
And in India, this problem is huge. With a 15.8% return rate, and ₹250–₹450 lost on every failed COD order, refunds quietly drain your margins. But here’s the real danger: 60% of customers who get a refund never come back.
That’s not just revenue lost today. It’s a relationship lost forever with a customer, i.e. after you’ve already spent good money acquiring them.
But here’s the thing. Some brands are now turning refunds into an opportunity. Instead of being the moment they lose a customer, refunds are becoming the moment they win them back. And it’s all thanks to one simple shift: wallet refunds.
Why traditional refunds aren’t working
Picture this from your customer’s point of view. Their order gets cancelled or returned. They’re already disappointed and now they have to wait 5–7 days for their refund to show up in their bank account.
That delay erodes trust. It breaks the brand connection. And the next time they think about ordering, chances are – they won’t.
Think about it, 60–70% of orders are COD in India and 25–30% of those COD orders fail. What does this lead to?
60% of customers who’ve dealt with a refund never come back to that brand.
And this creates a really big leak in your funnel.
How wallet refunds change everything
Refunding straight to wallets turns the entire experience around.
With Razorpay, you can issue a wallet refund in just a couple of clicks. The refund hits the customer’s wallet in seconds, with an instant SMS notification. And the whole process takes just 2–3 minutes of automated handling.
It also integrates seamlessly with Shopify so you can start using it right away without any dev time.
Here’s why it works so well:
- Instant gratification — The money is back in seconds, not days.
- Stays in your ecosystem — The wallet refund encourages customers to reorder, not spend elsewhere.
- Builds goodwill — Bonus credits on wallet refunds turn a bad experience into an incentive to return.
- Drives retention — Brands see up to 85% customer retention after wallet refunds, compared to just 40–50% with traditional ones.
- Speeds up reorders — Customers who get refunded to wallets reorder 65% faster than those refunded to bank accounts.
The bottom line
Every time you deal with a customer refund you are constantly asking yourself – Will this be the moment a customer walks away for good? It really doesn’t have to be so!
Wallet refunds give you the tools to turn refund moments into loyalty moments.
And with customer acquisition costs rising, and retention more valuable than ever, that might be the smartest move you make this year.
Ready to stop the refund leak and start building loyalty?
