Processing Invoices and Refunds - Capture Online vs. Capture Offline

Magento supports various different payment methods by default, which can then also be extended through third party modules and payment gateways. Order processing in Magento may differ depending on the types of payment methods used, and whether it processes payment online or offline.

Non-capturing or offline payment methods don't actually process payment, but are (as the name suggests) payments processed offline or outside of Magento. Examples of offline payment methods are: 

  • Cheque / Money Order
  • Cash on Delivery
  • Bank Transfer

Capturing or online payment methods are methods that do capture and process the transaction for orders in Magento. Examples of online payment methods are:

  • Paypal
  • Sagepay
  • Worldpay

Note: It is worth noting that online payment methods can be configured in various ways. Most payment methods configurational panel can be found by navigating to System > Configuration > Payment Methods.



Offline Invoices - Upon invoice submission, the system does not capture the payment. It is assumed that the payment is captured directly through the gateway or by other means, and you do not need to capture this payment through Magento.

Online Invoices - Upon invoice submission, the system captures the payment from the third-party payment gateway (this will most likely happy, again depending on configuration, at the time of order creation).


Credit Memos

Offline Credit Notes - To process an offline credit note, from the Order screen click Credit Memo, complete the relevant refund/return information and click Refund Offline.

Online Credit Notes - To process an online credit memo (for the transaction, and payment to be refunded via the third party gateway) click into the online invoice for the order (you cannot click on Credit Memo from the order screen, this is for offline refunds only). Once in the invoice, then click Credit Memo and choose Capture Online when submitting the credit memo. 


Note: The capabilities and configuration of the specific payment methods being used should be considered (above is simply a reflection of how the majority process orders - not all).

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