PayPal Australia has launched Free Return Shipping, a service allowing customers to refund their shipping costs on eligible online purchases.

Customers who have opted into the free service and are returning an item will be able to request a shipping refund on the PayPal website within 14 days and once approved, be reimbursed costs up to $45 on eligible purchases.

PayPal Refunded Returns (Free Return Shipping) will allow for up to four refunds per PayPal account until July 31, 2015 on eligible purchases. The service is being offered in partnership with Telus International Europe.

According to research from Ipsos and PayPal, overall e-commerce spend is forecast to grow by 10 per cent in 2015 to $50 billion, however, for half of Australian shoppers, expensive return shipping costs are considered a disincentive to shopping online.

The research, commissioned by PayPal Australia,  shows 90 per cent of shoppers would be more likely to make purchases online if there was an option for free return shipping.

Thirty three per cent of shoppers identified the hassle of returning goods as one of the most common obstacles to shopping online.

“Our consumer insights reveal that there is a real opportunity for retailers to experience a growth in sales if they address concerns around shipping, and offering services like free returns is just one of the ways in which they can meet evolving consumer expectations,” Emma Hunt, director of small business, PayPal Australia said.

“With competition heating up both locally and internationally, for our 110,000 merchants, Free Return Shipping is a simple and strong value proposition for their consumers that stands to set them apart.”

“An investment in an innovative shipping service not only overcomes a massive consumer pain point but can be a lucrative revenue driver for the merchants PayPal partners with.”