Question About Loyalty Point Deduction Rules During Refunds

Questions
2

For spend-based loyalty programs, Square handles point deductions during refunds using the following rules:

  1. Pre-tax Calculation: Yes, the points deduction is based on the pre-tax portion of the refund, maintaining consistency with how points are earned.
  2. Proration: Yes, the calculation is prorated. Points are deducted proportionally based on the refund amount relative to the original qualifying spend amount.
  3. Rounding: Square uses floor rounding when calculating point deductions, meaning partial points are rounded down to the nearest whole point. :slight_smile:

For your specific scenarios, assuming a rule of 1 point per $10 spent:

  • $1 refund: 0 points deducted (less than $10 threshold)
  • $5 refund: 0 points deducted (less than $10 threshold)
  • $10 refund: 1 point deducted (exactly one $10 increment)
  • $20 refund: 2 points deducted (two complete $10 increments)

The system maintains the same $10 increment rule used for earning points when calculating deductions. This ensures that the point balance accurately reflects the customer’s adjusted qualifying spend.

Important notes:

  • Points are only deducted if the original transaction earned points
  • The system will never deduct more points than were originally earned from the transaction
  • If a customer’s point balance would go negative from a refund, the balance is set to 0

This consistent approach ensures that your internal reward tracking will align with Square’s behavior as long as you follow these same rules.