Credit Card Fees on Refunds.

MikeHoncho

Morning.

Its been made clear to me this morning than when refunding customers, I am still charged the processing fee by the payment portal

For example a transaction this morning the customer "made in error / changed his mind" of £1170 has cost me £29.45 in fees - leaving me £29.45 in the Negative due to the customers "Accidental Order". 

I was under the understanding that the processing fee is cancelled out when the return is initiated. But after some digging and giving them a call this morning for clarification on the fees, they are not - it seems all these "accidental orders" over several years have cost me a tidy sum that made me sick to my stomach...

I'm happy to foot the bill if the refund is initiated by myself, either due to no stock or i am unable to satisfy the customers order in a timely fashion... I'm a small, 1 man business. I make enough to live and be happy loving the freedom of being self employed.

But i can't keep footing this bill for Kids who have regrets, cold feed & anxiety attacks after placing such orders in "Error" or not reading out lead times on made to order products.

I want to ask the legality of deducting this 2.5% Charge when refunding customers who make an "accidental" order and or otherwise...

In my eyes, its the customers mistake and they should foot the 2.5% Bill (in this case, £29.45) For their mistake and misjudgement on ordering...

To be clear, my products are hand made by me, and sold on my website. i cater for a very small niche, but busy market

for Clarity, I offer 3 Payment methods on my website. 1 Method i understand credits back the processing fees, But charges a flat 20p Processing fee. The other method im waiting on clarification....But i think they also charge the 20p flat processing fee.

To be also clear, this info regarding the CC fees is currently not on my website, So any previous orders are not effected. im trying to get clarification so i can change my website and T&C's to reflect these non-refundable charges

Please Advise?

Thanks!

MattMattMattUK

MikeHoncho said:

Morning.

Its been made clear to me this morning than when refunding customers, I am still charged the processing fee by the payment portal

For example a transaction this morning the customer "made in error / changed his mind" of £1170 has cost me £29.45 in fees - leaving me £29.45 in the Negative due to the customers "Accidental Order". 

I was under the understanding that the processing fee is cancelled out when the return is initiated. But after some digging and giving them a call this morning for clarification on the fees, they are not - it seems all these "accidental orders" over several years have cost me a tidy sum that made me sick to my stomach...

I'm happy to foot the bill if the refund is initiated by myself, either due to no stock or i am unable to satisfy the customers order in a timely fashion... I'm a small, 1 man business. I make enough to live and be happy loving the freedom of being self employed.

But i can't keep footing this bill for Kids who have regrets, cold feed & anxiety attacks after placing such orders in "Error" or not reading out lead times on made to order products.

I want to ask the legality of deducting this 2.5% Charge when refunding customers who make an "accidental" order and or otherwise...

In my eyes, its the customers mistake and they should foot the 2.5% Bill (in this case, £29.45) For their mistake and misjudgement on ordering...

To be clear, my products are hand made by me, and sold on my website. i cater for a very small niche, but busy market

for Clarity, I offer 3 Payment methods on my website. 1 Method i understand credits back the processing fees, But charges a flat 20p Processing fee. The other method im waiting on clarification....But i think they also charge the 20p flat processing fee.

To be also clear, this info regarding the CC fees is currently not on my website, So any previous orders are not effected. im trying to get clarification so i can change my website and T&C's to reflect these non-refundable charges

Please Advise?

Thanks!

This sounds entirely correct to me in the way that card processors operate, they will normally charge a low percentage of both the original payment and of the refunded amount.

You cannot charge your customers fees for cancelling an order if the only fee you have incurred is from card processing, it is an unfortunate cost of doing business. 

MikeHoncho

MattMattMattUK said:

MikeHoncho said:

Morning.

Its been made clear to me this morning than when refunding customers, I am still charged the processing fee by the payment portal

For example a transaction this morning the customer "made in error / changed his mind" of £1170 has cost me £29.45 in fees - leaving me £29.45 in the Negative due to the customers "Accidental Order". 

I was under the understanding that the processing fee is cancelled out when the return is initiated. But after some digging and giving them a call this morning for clarification on the fees, they are not - it seems all these "accidental orders" over several years have cost me a tidy sum that made me sick to my stomach...

I'm happy to foot the bill if the refund is initiated by myself, either due to no stock or i am unable to satisfy the customers order in a timely fashion... I'm a small, 1 man business. I make enough to live and be happy loving the freedom of being self employed.

But i can't keep footing this bill for Kids who have regrets, cold feed & anxiety attacks after placing such orders in "Error" or not reading out lead times on made to order products.

I want to ask the legality of deducting this 2.5% Charge when refunding customers who make an "accidental" order and or otherwise...

In my eyes, its the customers mistake and they should foot the 2.5% Bill (in this case, £29.45) For their mistake and misjudgement on ordering...

To be clear, my products are hand made by me, and sold on my website. i cater for a very small niche, but busy market

for Clarity, I offer 3 Payment methods on my website. 1 Method i understand credits back the processing fees, But charges a flat 20p Processing fee. The other method im waiting on clarification....But i think they also charge the 20p flat processing fee.

To be also clear, this info regarding the CC fees is currently not on my website, So any previous orders are not effected. im trying to get clarification so i can change my website and T&C's to reflect these non-refundable charges

Please Advise?

Thanks!

This sounds entirely correct to me in the way that card processors operate, they will normally charge a low percentage of both the original payment and of the refunded amount.

You cannot charge your customers fees for cancelling an order if the only fee you have incurred is from card processing, it is an unfortunate cost of doing business. 

Indeed. i understand the Payment Portals require their bit for their services. But my annoyance is i'm the one who gets shafted because a customer changed their mind.

eskbanker

MikeHoncho said:
But my annoyance is i'm the one who gets shafted because a customer changed their mind.

But that's an inherent part of selling goods online in the UK, i.e. you have to comply with the consumer rights legislation, which does indeed entitle customers to cancel purchase contracts for a full refund.  Having said that, you are entitled to charge them for the return postage costs if you feel that this would offset your card costs, provided that you use the correct form of wording in your terms....

Hoenir

Set your selling prices accordingly. On sales with a value of over a £1,000. A couple of £'s on every sale made will recoup the money lost on cancelled orders. 

MikeHoncho

eskbanker said:

MikeHoncho said:
But my annoyance is i'm the one who gets shafted because a customer changed their mind.

But that's an inherent part of selling goods online in the UK, i.e. you have to comply with the consumer rights legislation, which does indeed entitle customers to cancel purchase contracts for a full refund.  Having said that, you are entitled to charge them for the return postage costs if you feel that this would offset your card costs, provided that you use the correct form of wording in your terms....

Im annoyed in myself its took me nearly 9 years to realise this... I've just worked out that its cost ME nearly £3000 in 2024 in these Non-Refundable processing fees from orders people have cancelled due to changing their mind.

The consumer is protected - but what about the business?

Its make me feel really sick....!

molerat

So you need to look at your overall turnover and add x% on prices to cover that £3K.  Or no longer accept credit cards and use only payment platforms that do not impose that amount of charge.  Only you can decide how those options will affect your business.

Gandalf644

MikeHoncho said:

eskbanker said:

MikeHoncho said:
But my annoyance is i'm the one who gets shafted because a customer changed their mind.

But that's an inherent part of selling goods online in the UK, i.e. you have to comply with the consumer rights legislation, which does indeed entitle customers to cancel purchase contracts for a full refund.  Having said that, you are entitled to charge them for the return postage costs if you feel that this would offset your card costs, provided that you use the correct form of wording in your terms....

Im annoyed in myself its took me nearly 9 years to realise this... I've just worked out that its cost ME nearly £3000 in 2024 in these Non-Refundable processing fees from orders people have cancelled due to changing their mind.

The consumer is protected - but what about the business?

Its make me feel really sick....!

As someone has mentioned upthread, ideally you need to build these processing costs into your pricing model, just as you would do for materials, labour, energy etc.

These are the costs (such as the one you highlight) to do buisness online in the UK and in effect it is the price you pay to sell things online.

Sorry to say it, but if you don't like it, then restrict your business to selling 'over the counter' only. Or alternatively, as most businesses do, price it into your business costs to pass onto consumers.

MikeHoncho

Gandalf644 said:

MikeHoncho said:

eskbanker said:

MikeHoncho said:
But my annoyance is i'm the one who gets shafted because a customer changed their mind.

But that's an inherent part of selling goods online in the UK, i.e. you have to comply with the consumer rights legislation, which does indeed entitle customers to cancel purchase contracts for a full refund.  Having said that, you are entitled to charge them for the return postage costs if you feel that this would offset your card costs, provided that you use the correct form of wording in your terms....

Im annoyed in myself its took me nearly 9 years to realise this... I've just worked out that its cost ME nearly £3000 in 2024 in these Non-Refundable processing fees from orders people have cancelled due to changing their mind.

The consumer is protected - but what about the business?

Its make me feel really sick....!

As someone has mentioned upthread, ideally you need to build these processing costs into your pricing model, just as you would do for materials, labour, energy etc.

These are the costs (such as the one you highlight) to do buisness online in the UK and in effect it is the price you pay to sell things online.

Sorry to say it, but if you don't like it, then restrict your business to selling 'over the counter' only. Or alternatively, as most businesses do, price it into your business costs to pass onto consumers.

I understand, but at the same time i dont see why i should have to build these costs to cover my side when customers ignorance causes the charges. I guess as a customer they dont see these charges, and nor did i until this morning. 

eskbanker

MikeHoncho said:
i dont see why i should have to build these costs to cover my side when customers ignorance causes the charges. I guess as a customer they dont see these charges

Exactly this - customers of a business won't be interested in anything other than the purchase price of the goods, but branding that as 'ignorance' seems to miss the point, when they're simply exercising their legal rights.  Nobody's forcing you to build such costs into your selling prices but obviously if you don't then you'll be less profitable, it's up to you....

CliveOfIndia

This is one reason why it's still not uncommon to find quite a lot of small businesses who simply refuse to accept credit cards at all.  Even without the "refund" issue, the standard fees imposed on each transaction can make a not insignificant dent in a small trader's profits.

I realise your options are somewhat more limited if you're selling primarily online rather than from a physical shop, but as has been mentioned by a previous poster, you need to factor it in as a business cost.