Help & Resource Center

Processing Partial Refunds in PayPal


How can I process a partial refund if my customer paid using PayPal?


There is a known bug with PayPal and Magento, so processing a partial refund requires several steps.

  1. You need to have enabled IPN notifications through your PayPal account. Log into your PayPal account and go to Profile -> My Selling Tools.
  2. Expand "Getting Paid and Managing My Risk" and then click on Update the Instant payment notifications. Follow the instructions to enable your IPN including entering your Notification URL. Your notification URL will be something similar to http://YOUR

Once you have completed this step, please let us know so we can install a module that makes it possible to issue partial refunds. After we install the module you will be able to process partial refunds by following these steps. This two step process first refunds the money via PayPal and then updates the inventory via Magento.

  1. Log into your PayPal account and issue the refund.
  2. You will receive an IPN notification in Magento.
  3. After you receive this IPN notification, you can process an offline credit memo with the correct quantities of the items that were returned. 


UPDATE: 5/6/14

While we have tried implementing the solution above, we discovered it caused other errors with order processing. Specifically, enabling IPN notifications did NOT work, and it subsequently caused some orders to be sent to Magento with a status of Suspected Fraud, when they were, in fact, legitimate orders. We have since gone back to not having IPN notifications turned on, which does not allow partial credit issuing via PayPal. Modern Retail continues to work on solving this issue, and we will post updates here as we get them.