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A
AshSab1903
July 24, 2024
Question

Refund of credit card transaction and the fees

  • July 24, 2024
  • 2 replies
  • 0 views

I recently had a customer call me to refund a payment he made using his credit card incorrectly.

The original transaction was for $6740.06 and the processing fee charged to me was $236.20

 

Based on customer request, I went in the original transaction and did a reversal to refund the money.

Customer was refunded back the full amount of $6740.06 however I was charged a fee of $236.20

 

So now that transaction got fully reversed, the customer got back their full $6740.06 however I was left holding the bag with two charges of $236.40 so total amount I am out by is 472.40

It has never happened with me when using other processors like PayPal. 

Why is QB merchant processing doing this? I have called customer service multiple times but to no avail.

Very frustrating! Anybody else had similar experience?

 

    2 replies

    FishingForAnswers
    FishingForAnswers
    July 24, 2024

    @AshSab1903  Hey, those yachts aren't going to afford themselves.

    A
    AshSab1903Author
    July 24, 2024

    I have been using PayPal for years and have done several refunds but never got charged a penny for such refunds.

      M
      Maybelle_S
      July 24, 2024

      I can imagine the hurdle you've been through regarding the credit card refund and fees, Ash. I'll make it up to you by ensuring you get the urgent help you need.

       

      When processing a refund for a credit card transaction, PayPal refunds the entire transaction amount, including the initially deducted processing fee. However, please note that the processing fee from the original transaction won't be refunded, as this policy can vary among payment processors and their terms of service.

       

      Also, reversing a payment may incur a processing fee, similar to the fees charged when accepting credit card payments. This fee is applied to cover the cost of processing the reversal.

       

      For clarity on fees and their application in your case, I recommend contacting our Customer Support Team again. They can provide detailed guidance on the fee structure and help address any discrepancies you've encountered. Please know that your concerns are valid, and it's important to get clarification to resolve this issue effectively.

       

      To learn more about industry terms to help you accept credit card payments, see this link: Common terms to process credit cards.

       

      Additionally, I recommend reviewing some of our commonly asked payment questions through this article: QuickBooks Payments FAQ.

       

      Press the Reply button below if you have other questions regarding PayPal's refund policies and processing fees in QuickBooks. My team and I are ready to help you out.

      BigRedConsulting
      BigRedConsulting
      July 24, 2024

      @AshSab1903  RE: I was left holding the bag with two charges of $236.40 so total amount I am out by is 472.40.

       

      Yes, this is the standard way it works. I'm not sure why the reps you talked to don't know that.

       

      Merchant services charge you both for charges and refunds. Almost any time money moves you, the merchant, get charged. My merchant service (not Intuit) does the same thing. I think they all do. Really, it's Visa, MasterCard, AmEx and the other card issuers that charge much of that fee. Your merchant service can't really do anything about that. They're the middle-man.

       

      (PayPal is different, because when they charge you to accept a payment, it may be from the customer's PayPal balance, or a transfer from their bank account, and in those cases PayPal gets the whole fee, so they are free to give it back. I'm not sure what they do if the customer actually used a credit card to fund the purchase.)

       

      Depending on the common practices for your business type, and the circumstances of the return, you may want to consider reducing the refund to the customer to cover some or all of these charges.

       

      For example, if the return is all on you (you screwed up) then perhaps don't charge the customer a fee. But if the return is more on the customer (say they buy three of something - like three pair of the same pants in different sizes - fully intending to return two of them), then perhaps charge a fee when they do that.  Your case, where the customer used the wrong card, might be more in that latter category.

       

      Some businesses, for example, charge a 10% "restocking" fee for a return, which would more than cover the 7% you paid the merchant service. Or, you could charge a 5% fee to cover most of it. Or something like that.

       

      Or perhaps you could tell customers up front that if they return something purchased with a credit card, there's a 7% fee. But if they purchase with a check, then no fee. That sort of thing can work for some business types.

       

      Another tactic to reduce the fees is to always or usually refund the customer by check. You could even FedEx it to them - for a whole lot less than $236!

       

      Also, some businesses limit the amount that can be charged to a card to help limit fees on large purchases. For example, auto dealerships limit how much you can charge to buy a car. I've been limited to $3,000 or so in the past. Basically a down payment. I'd love to charge $25,000 to get points, but they won't do it 'cause they don't want to pay the fees.

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