Internal Use Only means that the record is still active and can be used by an administrator and throughout the backend. It will just not ever be displayed as an option on a public site, unless an administrator is logged in.
Inactive is essentially deleting the record. Since control records have been used historically, they cannot be deleted. Making the record inactive means it can’t be used at all. It would only appear in reports and places where historical data is displayed.
Internal Use Only means it exists, but only for administrators. Inactive means it doesn’t exist.
An Example of how to use them when dealing with payment methods:
- Make “check” and “cash” internal use only, because you would never want a customer to choose those on the public checkout page. However, if an administrator is manually entering an order, they might choose them.
- Make “Diner’s Club” inactive because your merchant gateway stopped accepting it and you will no longer allow it as a payment method
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