Store credit
A balance sitting on a customer's account that only spends in your store: what you issue instead of pushing money back to their card.
See it
What it is
Store credit is a balance attached to a customer's account that can only be spent with you. It shows up after a return, a cancelled or damaged order, a loyalty payout, or a goodwill gesture from support. The customer sees 'you have 48.00 in credit' on their account page, and it applies automatically or by toggle at checkout.
Merchants like it because the cash never leaves the business, and customers spending credit routinely overspend it: a 40 credit becomes a 70 order. Bonus credit ('take 55 in credit instead of a 50 refund') is the standard nudge, and returns tools like Loop and Returnly are built around exactly that trade.
Do not confuse it with a gift card. A gift card is bearer tender, transferable, bought with real money; store credit is tied to one account, usually non-transferable, and issued by you rather than purchased. The real gotcha is legal: when a customer has a statutory right to a refund (faulty goods, UK and EU distance-selling cancellations, many US states), credit is an offer you can make, not an outcome you can force. And when an order paid with credit is refunded, the credit portion goes back as credit, never as cash, or you have just built a money-laundering machine.
Ask AI for it
Add store credit to this store. Give every customer account a credit balance with a ledger of entries (amount, reason, order reference, issued date, expiry if any) so every change is auditable. Show the balance on the account dashboard with the transaction history. At checkout, surface an 'Apply store credit' toggle that shows the available balance, applies it as tender after tax and shipping, supports partial use, and leaves the remainder for later. Add an admin action to issue or revoke credit with a required reason, an option to offer bonus credit in place of a cash refund on returns, and logic that refunds credit-paid amounts back to credit rather than to a card.