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Credit card companies (i.e., Visa, Mastercard) absolutely do refund fees on payments when the retailer processes a refund. This is why retailers generally requi

Credit card companies (i.e., Visa, Mastercard) absolutely do refund fees on payments when the retailer processes a refund. This is why retailers generally require you to use the same method of payment to get your refund. It's uniquely online processors that do not refund fees.

stu2b50 6y ago
That's because they're not the same class of processor. The chain is like Your bank account -> visa/mastercard/discover -> PayPal's merchant bank account -> the person you're paying bank account PayPal only replaces the ccs when you pay with their wallet. Otherwise they're just orchestrating the money flow (because integrating with the CC companies is a gigantic PITA)
- syshum 6y ago
  PayPal is not a credit card processor, it is Money transmitter, different legally Stripe on the other hand is a credit card processor, and as a merchant you get a Merchant account, the same like Authorize.net who used to be the largest online processor before Stripe. Back in the day (and I have been out of that market for over a decade) Authorize.net absolutely refunded processing fees on refunds
  - oneplane 6y ago
    Didn't PayPal get a bank license which also caused them to close a lot of accounts that were created decades ago by users that weren't old enough for back accounts back then?
  - buildawesome 6y ago
    Just to add, PayPal is also most likely a credit card processor, serving as a Payment Facilitator (PayFac), which enables others to become CC Processors. It happens that PayPal and Stripe are money transmitters, which may come with being a PayFac. Auth.net is a gateway/portal that facilitates CC transactions, and while you may be refunded on processing fees for the use of the gateway, someone, somewhere is likely eating the interchange and most likely occurring at the merchant level.
    - arcticbull 6y ago
      Notably, Square, founded in 2009 didn't become a money transmitter until sometime in 2013, IIRC, and I think a few laggard states in 2014. This was in service of Square Cash, not the core payments business. They were, however, merchant of record the whole time.
  - leeoniya 6y ago
    Authorize.net is not a payment processor but a payment gateway. TSYS, Vantiv, PaymentTech are processors. your merchant account is usually with (i think) the acquiring bank that's part of the Visa/MasterCard/Amex/Discover network.
buildawesome 6y ago
CC Processors like Visa and Mastercard do refund fees on CC processing, but the interchange or % of return is smaller than the actual gross. You don't necessarily get "all" of your refund, if you're a merchant.
- adrr 6y ago
  Only processing fees aren’t refunded which is like 25 basis points for a mid size business.
  - jashmatthews 6y ago
    It’s highly country dependent. Card present transactions are still several percent in many countries.
BillinghamJ 6y ago
That isn't true. They enable the return of the interchange (from the issuing bank), they do not refund the scheme fees. In fact, you will pay more on the scheme fees to process a refund, as you need to send another message into the scheme's network - often charged per message or per byte etc. Interchange is not payment scheme revenue - it is just passed through to the issuing bank.
- gamblor956 6y ago
  Scheme fees generally don't apply to US credit card transactions... That is primarily an issue for cross-border credit or debit card transactions.
  - lxgr 6y ago
    That clearly can't be true, as it would mean that Visa and Mastercard would be working for free for domestic transactions. Scheme fees are much lower for domestic transactions as far as I'm aware, though.
    - gamblor956 6y ago
      Visa and Mastercard don't use a scheme fee in the U.S. The credit card system is structured differently here than it is in the EU. Generally, Visa and Mastercard simply charge more per transaction for different cards in the US. For example, rewards cards cost merchants more, which is why many gas stations won't accept them.
      - BillinghamJ 6y ago
        The interchange is higher, sure, but that still goes to the issuing bank. Working with schemes still involves separate fees, as does processing and acquiring.
saurik 6y ago
My experience with PayPal was that they almost always gave me my fees back when I processed a refund (there were corner cases where that didn't happen); it is possible the rules changed or that I am misremembering the extent of the cases when they don't, though (I haven't processed payments in a year and a half).
- erikrothoff 6y ago
  No, OP is just plain wrong.
- theturtletalks 6y ago
  Paypal about a year ago changed their policy that they would keep the credit card processing fees for refunded orders.
tyingq 6y ago
"It's uniquely online processors that do not refund fees" Uniquely those that provide some higher level thing, like PayPal or Stripe. If you have a merchant account, you can get an actual refund for online purchases.
wrsh07 6y ago
Notably, it's a somewhat recent change for Stripe. They had refunded fees but iirc it meant they were paying a small fee per refunded transaction (which in a sense subsidizes apps that incur frequent refunds) which they wanted to stop doing. A quick search showed they started refunding fees in 2012 and stopped in 2017. Here's a discussion from the past couple years: https://news.ycombinator.com/item?id=22371330 https://news.ycombinator.com/item?id=22371330
- TAForObvReasons 6y ago
  They stopped doing it for new customers in 2017. Grandfathered customers saw the policies change in March of this year. My company's account saw the change in late March, while we were all staying at home, so that felt like a gut punch. https://news.ycombinator.com/item?id=22371330 https://news.ycombinator.com/item?id=22371330 was contemporaneous
kelnos 6y ago
> It's uniquely online processors that do not refund fees. It sorta makes sense, since the online processors are usually middlemen that only make money on the fees they themselves charge. I could see their perspective being "we provided the service; that service is not un-provided because the customer returned the item and you sent them a refund... in fact, you used us even more because we had to mediate the refund transaction!" I think if the fees were just a few percent, I wouldn't have too much trouble accepting that logic, but from Apple, where it's 30%... not so much. The card issuers don't care quite as much about keeping the fees in a refund scenario, I guess... though I believe you don't get everything back during a refund, regardless.
- sriku 6y ago
  Why do such fees (online, appstore, etc) have to be "some x% of the transaction value" and not just a flat fee?
  - chrismcb 6y ago
    Because, money. I can understand, on a credit transaction, there is a larger risk when a larger amount is spent. But even then I would expect some tiers. But for an online transaction, where there is no real risk to the middleman, it is about making more money.
jimmaswell 6y ago
I've bizarrely been refunded in cash multiple times at Wal Mart for card/app purchases.
tekknik 6y ago
> This is why retailers generally require you to use the same method of payment to get your refund. This is for AML, not because of fee refunds.

stu2b50 6y ago

That's because they're not the same class of processor. The chain is like Your bank account -> visa/mastercard/discover -> PayPal's merchant bank account -> the person you're paying bank account PayPal only replaces the ccs when you pay with their wallet. Otherwise they're just orchestrating the money flow (because integrating with the CC companies is a gigantic PITA)

syshum 6y ago
PayPal is not a credit card processor, it is Money transmitter, different legally Stripe on the other hand is a credit card processor, and as a merchant you get a Merchant account, the same like Authorize.net who used to be the largest online processor before Stripe. Back in the day (and I have been out of that market for over a decade) Authorize.net absolutely refunded processing fees on refunds
- oneplane 6y ago
  Didn't PayPal get a bank license which also caused them to close a lot of accounts that were created decades ago by users that weren't old enough for back accounts back then?
- buildawesome 6y ago
  Just to add, PayPal is also most likely a credit card processor, serving as a Payment Facilitator (PayFac), which enables others to become CC Processors. It happens that PayPal and Stripe are money transmitters, which may come with being a PayFac. Auth.net is a gateway/portal that facilitates CC transactions, and while you may be refunded on processing fees for the use of the gateway, someone, somewhere is likely eating the interchange and most likely occurring at the merchant level.
  - arcticbull 6y ago
    Notably, Square, founded in 2009 didn't become a money transmitter until sometime in 2013, IIRC, and I think a few laggard states in 2014. This was in service of Square Cash, not the core payments business. They were, however, merchant of record the whole time.
- leeoniya 6y ago
  Authorize.net is not a payment processor but a payment gateway. TSYS, Vantiv, PaymentTech are processors. your merchant account is usually with (i think) the acquiring bank that's part of the Visa/MasterCard/Amex/Discover network.

buildawesome 6y ago

CC Processors like Visa and Mastercard do refund fees on CC processing, but the interchange or % of return is smaller than the actual gross. You don't necessarily get "all" of your refund, if you're a merchant.

adrr 6y ago
Only processing fees aren’t refunded which is like 25 basis points for a mid size business.
- jashmatthews 6y ago
  It’s highly country dependent. Card present transactions are still several percent in many countries.

BillinghamJ 6y ago

That isn't true. They enable the return of the interchange (from the issuing bank), they do not refund the scheme fees. In fact, you will pay more on the scheme fees to process a refund, as you need to send another message into the scheme's network - often charged per message or per byte etc. Interchange is not payment scheme revenue - it is just passed through to the issuing bank.

gamblor956 6y ago
Scheme fees generally don't apply to US credit card transactions... That is primarily an issue for cross-border credit or debit card transactions.
- lxgr 6y ago
  That clearly can't be true, as it would mean that Visa and Mastercard would be working for free for domestic transactions. Scheme fees are much lower for domestic transactions as far as I'm aware, though.
  - gamblor956 6y ago
    Visa and Mastercard don't use a scheme fee in the U.S. The credit card system is structured differently here than it is in the EU. Generally, Visa and Mastercard simply charge more per transaction for different cards in the US. For example, rewards cards cost merchants more, which is why many gas stations won't accept them.
    - BillinghamJ 6y ago
      The interchange is higher, sure, but that still goes to the issuing bank. Working with schemes still involves separate fees, as does processing and acquiring.

saurik 6y ago

My experience with PayPal was that they almost always gave me my fees back when I processed a refund (there were corner cases where that didn't happen); it is possible the rules changed or that I am misremembering the extent of the cases when they don't, though (I haven't processed payments in a year and a half).

erikrothoff 6y ago
No, OP is just plain wrong.
theturtletalks 6y ago
Paypal about a year ago changed their policy that they would keep the credit card processing fees for refunded orders.

tyingq 6y ago

"It's uniquely online processors that do not refund fees" Uniquely those that provide some higher level thing, like PayPal or Stripe. If you have a merchant account, you can get an actual refund for online purchases.

wrsh07 6y ago

Notably, it's a somewhat recent change for Stripe. They had refunded fees but iirc it meant they were paying a small fee per refunded transaction (which in a sense subsidizes apps that incur frequent refunds) which they wanted to stop doing. A quick search showed they started refunding fees in 2012 and stopped in 2017. Here's a discussion from the past couple years: https://news.ycombinator.com/item?id=22371330 https://news.ycombinator.com/item?id=22371330

TAForObvReasons 6y ago
They stopped doing it for new customers in 2017. Grandfathered customers saw the policies change in March of this year. My company's account saw the change in late March, while we were all staying at home, so that felt like a gut punch. https://news.ycombinator.com/item?id=22371330 https://news.ycombinator.com/item?id=22371330 was contemporaneous

kelnos 6y ago

> It's uniquely online processors that do not refund fees. It sorta makes sense, since the online processors are usually middlemen that only make money on the fees they themselves charge. I could see their perspective being "we provided the service; that service is not un-provided because the customer returned the item and you sent them a refund... in fact, you used us even more because we had to mediate the refund transaction!" I think if the fees were just a few percent, I wouldn't have too much trouble accepting that logic, but from Apple, where it's 30%... not so much. The card issuers don't care quite as much about keeping the fees in a refund scenario, I guess... though I believe you don't get everything back during a refund, regardless.

sriku 6y ago
Why do such fees (online, appstore, etc) have to be "some x% of the transaction value" and not just a flat fee?
- chrismcb 6y ago
  Because, money. I can understand, on a credit transaction, there is a larger risk when a larger amount is spent. But even then I would expect some tiers. But for an online transaction, where there is no real risk to the middleman, it is about making more money.

jimmaswell 6y ago

I've bizarrely been refunded in cash multiple times at Wal Mart for card/app purchases.

tekknik 6y ago

> This is why retailers generally require you to use the same method of payment to get your refund. This is for AML, not because of fee refunds.