Use the following steps if you need to refund one payment method to allow your customer to pay using another payment method. This is particularly useful for situations when the wrong credit card (or bank account) was charged and the customer instead, wants to pay using cash, a different checking account, another credit card, or any other payment method.

It is important that you probe and understand exactly what happened in reality before you change anything in QuickBooks. If, for example, the credit card was charged and they already called and had Merchant Services refund the card, the process for entering the transactions in QuickBooks may be slightly different.

  1. Process a refund for the original payment.
    1. From the Customers menu, choose Create Credit Memos/Refunds.
    2. In the Customer:job field, enter the customer name.
    3. Choose the item and enter the amount.
    4. Select Save & Close.
    5. In the Available Credit window that appears, select Give a refund then choose OK.
    6. In the Issue a Refund window, enter the amount and select the appropriate payment method for the refund.
    7. Make sure Process credit card refund when saving is:
      • Checked: If the payment still needs to be processed online.
      • Unchecked: If there is no need to process the payment online or if it has already been processed.
    8. Select OK.
  2. Delete the Credit Memo associated with the refund. This will un-link the two transactions.
    1. Locate and double-click the Credit Memo.
    2. On your keyboard, press Ctrl+D.
    3. Select OK when you get the Delete Transaction prompt.
  3. Go to the original payment, uncheck the invoice and check the refund. This will link the payment to the refund and leave the invoice open.
  4. Pay the original invoice using the replacement or new payment method.