Did you know some credit card processors are now keeping the fee charged even if refunds to customers occur?
Even if the refund was immediate. It’s true.
So say you just did a $100 transaction and the fee to the credit card processor was 3% – you would get $97 and the processor $3. But say the customer needed to return the product (or complained about the service) – so you issued a refund. You (as the business owner) refund the full price back to the customer.
Unfortunately the processor doesn’t refund the fee they charged you to process the sale and now you are out $3.
You might be thinking, “it’s just $3”.
But what happens when the sale is $1000? The fee is $30.
And if the sale is $10,000? The fee is $300.
Those non-returned refund fees can add up quick and can cost companies massive amounts of lost revenue over time.
The credit card processing companies say “its the cost of doing business and the risk involved in running such a business.”
Hey I can see if there was a customer dispute whereby the product or service just didn’t live up to standards and the company electively returned the customer their money. But, there are some customers (and I witnessed this the other days while at the mall) who immediately have buyers remorse and return a product 10 minutes after buying. Yup, the company refunded the customer. And lost about $15 by my calculations to fees for products that were returned.
This will lead more companies to raise their prices to count for the potential loss of fees due to refunds. Or surcharge the customer for processing fees.
My friend Sandra Carter expressed her concern…”This will go over like a lead balloon, but… I think the customer should bear the 3% cost, like a re-stock fee, which is very common. On the other hand, as a consumer, I wouldn’t like that at all but it might make me think twice before making those impulse purchases.“
Sadly, some of my clients have already experience this practice of being denied a refund when issuing a refund to their customers.
I would love to know.
Comment below and share your experience about your credit card processor. With your voice maybe we can make a difference.