E-commerce tips
Shopify store credit: What it is & how to use it?
By
Emma
on
Feb 28, 2025
Table of content
- 1. What exactly is Shopify store credit?
- 2. Why offer store credit on your Shopify store?
- 3. How to implement Shopify store credit: Methods explained
- 4. Step-by-step: Issuing store credit to a customer (Detailed walkthrough)
- 5. Managing and tracking store credit balances
- 6. Best practices for maximizing Shopify store credit effectiveness
- 7. Conclusion
- 8. FAQs about Shopify store credit
Store credit has long been a useful tool among online sellers. More than a mere alternative to refunds on Shopify, the credit system is said to boost customer loyalty, encourage repeat purchases, and improve cash flow. So, what exactly is this type of ecommerce incentives, and how can you make the most of it? This article provides you with a comprehensive look at Shopify store credit, what it is, why it matters, how to issue it, and best practices.
1. What exactly is Shopify store credit?
Store credit is simply a non-transferable monetary value linked directly to an individual customer's account. In online stores, it acts as a digital balance that customers can use to make purchases in your store in place of traditional payment methods like credit cards, PayPal, or cash.
In the context of eCommerce, gift cards vs. store credit may appear similar because they both are types of store-funded purchasing tools. However, these two differ vastly when it comes to functionality, flexibility, and usage rules. Gift cards are often issued with a fixed value. The recipient should redeem the balance in a single use or within a short time frame.
Digital store credit, on the other hand, is more dynamic. It doesn’t come with usage frequency, and one’s Shopify credit balance can increase or decrease dynamically depending on their purchase activity, returns, or promotional incentives. Store credit is often issued as a means of offering refunds, incentivizing customer loyalty, or a quick fix to resolve customer service issues.
Image source: Shopify
How does store credit typically work on Shopify?
Store credit on Shopify is typically managed based on a manual or app-integrated adjustment mechanism. Basically, you, as a merchant, give customer store credit by performing some setups within the Shopify dashboard or via third-party apps.
The customer will then be able to view and apply the available credit automatically toward the total order amount during checkout. And all such activities are tracked and adjusted accordingly in the customer’s profile and the order timeline within your Shopify admin.
2. Why offer store credit on your Shopify store?
2.1 Boost customer retention and loyalty
Store credit can increase customer retention on Shopify. Just like reward points, it is something tangible within your store. As a result, people are prone to return just to take advantage of it, using store credit for partial payment on Shopify in the future.
The effectiveness of store credit is also further amplified when integrated into a structured loyalty program. For instance, assigning store credit as tier-based rewards or for milestones (like birthdays or membership anniversaries) keeps customers emotionally and financially invested in your brand over time.
Case studies also show that brands using store credit effectively often see a measurable lift in customer lifetime value (LTV). A good example is the case of Chubbies. When encountering a return request, the company would gift customers a bonus credit, which they can then use as a partial payment for new purchases of other items. The outcome is a positive 100% increase in customer lifetime value (CLV).
2.2 A smart alternative to refunds
2.3 Increase average order value (AOV)
Shopify store credit is more than just an alternative option to refunds; it’s also a powerful tool for encouraging upsells and larger purchases. Most of the time, customers end up spending more than the credit amount they are given.
Similar to how discount codes work, store credit lowers not only customers’ psychological barrier to return but also price sensitivity. Due to the perceived value of “free money,” they may feel more comfortable upgrading to higher-value items or adding more products to their cart.
2.4 Enhance customer service & recover from negative experiences
2.5 Incentivize specific actions (beyond refunds)
Store credit can also act as flexible incentives and rewards to drive specific customer actions. According to a customer survey by Yotpo, 47% of participants indicated that they are more likely to give a product review if offered a discount, coupon, or similar incentive.
3. How to implement Shopify store credit: Methods explained
So, how can you actually issue store credit to the customer? In this section, we will guide you through the two methods on how to give store credit on Shopify.
3.1 Using Shopify's built-in functionality (primarily via Customer Accounts)
This method is available to all Shopify merchants as part of the early access program. In essence, you use Shopify’s store credit system directly from each customer’s profile to assign, adjust, or remove store credit manually.
A great thing about this method is that it’s simple and straightforward. However, it does not offer native support for bulk issuing or workflow automation yet. That means you will need to assign, adjust, or remove store credit for each customer individually and manually, which can be frustrating for large-scale operations.
In addition, the built-in functionality is limited to basic Shopify credit balance adjustments. Other setups, such as issuing store credit through post-purchase automation flows or integrating with loyalty programs, cannot be configured natively.
In order to set up Shopify store credit, you can refer to the following step-by-step guide:
Step 4: Switch on the Store credit button option to implement store credit on Shopify.
3.2 Leveraging Shopify store credit apps (for advanced use cases)
Another way to implement store credit on Shopify is to install third-party apps from the App Store. This method is common for those stores with advanced needs, such as automating refund workflows, integrating loyalty programs, managing large-scale credit distribution, or offering personalized credit rewards based on customer behavior.
The thing about Shopify store credit apps is their fully developed functionality. Other than simply issuing store credit, they offer automated store credit management and extensive customization options. Some even integrate loyalty programs, cashback rewards, and automated refund flows. Their tracking system and reporting capabilities are also significantly better developed.
Of course, there is a trade-off. First of all, such apps often come with additional costs. Page speed is also among the biggest concerns. While it won’t affect your site performance much if you install one or two Shopify apps, stacking too many plugins on top of each other will.
Image source: Koin
A good piece of advice for choosing a store credit app is to focus on apps that prioritize speed, backend stability, and minimal front-end footprint. Other essential criteria to look at are ease of use, compatibility with Shopify POS, integration with loyalty and automation workflows, and multi-currency support.
Among the best store credit tools for Shopify available is Koin Cashback & Store Credit. This tool offers a comprehensive solution for managing store credits, with many powerful features:
Automated store credit reward for refunds, loyalty rewards, and other conditional triggers with Shopify Flow integration
Widget placement across profile, product, and cart pages to promote store credit rewards and engage customers
Store credit rewards system to encourage customers to purchase more
All in one dashboard for tracking store credit activity in real time
Absolutely free to start.
Some other popular names include Rise.ai, Shopjar Store Credit, and LoyaltyLion. You can also find store credit functionality built into popular app categories such as Loyalty & Rewards, Returns Management, and Subscription apps.
4. Step-by-step: Issuing store credit to a customer (Detailed walkthrough)
Step 2: Select a specific customer profile.
Step 3: Scroll down to Store credit section in the right sidebar. Then click on the pencil icon to start editing the customer’s Shopify credit balance.
Step 4: Under Adjustment, choose Credit to add store credit to the customer’s account. (or Debit if you want to reduce or remove their current credit balance).
Step 5: Enter the amount, select the currency, and optionally set an expiration date.
Step 6: Click Review changes > Credit {Amount} to confirm.
5. Managing and tracking store credit balances
One thing about Shopify store credit is that the recipient will not be notified about the change in their credit balance. Thus, you will need to inform the customers, sending them the new customer account login URL in the Customer accounts settings. Only when they are provided with access to such URL will they be able to view their balance and utilize the credit upon checkout.
In the meantime, store owners can track and manage store credit via the Shopify Admin. All you need to do is go to Customers section and click on the customer’s page. There, you will find all the related information about the issued amount, remaining balance, and expiration.
Another way to track store credit is via the Reports section. This method allows for a broader view of all transactions, usage, and remaining balances. In the Shopify dashboard, you navigate to the Analytics > Reports. Click on the Category filter and choose Finances from the drop-down menu. There, you will be able to view all sorts of store credit-related reports thus far, such as Store credit transactions and Payments by type. There is also the option to filter such reports by date range.
In case you use a third-party app to issue store credit on Shopify, such plugins often have their own reporting tools. You can find them in the credit analytics section or app dashboard.
6. Best practices for maximizing Shopify store credit effectiveness
Below are some proven strategies to help you maximize the impact of store credit:
Make it a part of your returns policy. Set clear terms and conditions (expiry, limitations) to manage expectations. This establishes a clear process and helps avoid confusion.
Strategically include store credit in your loyalty programs. Strengthen your loyalty initiatives by offering store credit rewards to returning customers. It’s an effective way to increase engagement and customer lifetime value.
Promote it as an incentive. Use store credit as an incentive to motivate desired action. You could post the message "Get $10 credit towards your next purchase!" or "Get store credit for referring a friend."
Make it easy for customers to see and use their credit. Visibility increases usage. Enable new customer accounts and display credit balances clearly on profile or cart pages.
Train customer support on issuing and explaining credit. Make sure your support staff knows how to issue credit and communicate it in an open format to customers when required.
Analyze data. Track store credit extended and redeemed consistently, along with its impact on AOV, retention rate, and repeat buying. Use the data to hone your strategy in the long run.
Common pitfalls of using store credit in online stores
The implementation of a store credit system is indeed effective. On the flip side, it’s not always perfect. Following are some Shopify store credit limitations and things to keep in mind:
Customers might prefer cash refunds. Issuing store credit is not always a viable option. Some may see it as restrictive, especially in urgent refund cases.
Complexity of tracking without a dedicated app. Shopify’s native tools are limited when it comes to reporting and analytics, especially at scale.
Ensuring customer awareness of their credit. Since Shopify doesn’t send automatic notifications, merchants must handle communication manually.
Accounting considerations. Store credit may be considered deferred revenue or a liability, so it’s important to track it properly.
7. Conclusion
8. FAQs about Shopify store credit
Emma C.
Get value insights to grow your stores!
-About Author
Emma C.
As the Chief Marketing Officer at KOIN app, I’m here to build a robust ecosystem by collaping with Shopify apps. Together, we can create seamless integrations that add more value to our shared customers.
KOIN helps merchants retain customers, increase repeat purchases, and drive loyalty by offering cashback and store credit rewards.
📩 Let’s connect! emma@getkoin.io
