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The author mentioned they didn't like that transaction fees are not given back during refunds but unfortunately both Stripe and PayPal do the same thing. They s

by nickjj 4y ago

The author mentioned they didn't like that transaction fees are not given back during refunds but unfortunately both Stripe and PayPal do the same thing. They started doing this a few years ago. If someone buys your product for $100 and Stripe's fee is $3.20 and you issue a refund to someone you will refund the user $100 and Stripe keeps the $3.20 so that refund really cost you $3.20.

jeromegv 4y ago
Yep. It’s very sad for the owner. And I empathize. But a lot of things they blame shopify for is actually the exact same across the ecommerce spectrum.
voiper1 4y ago
I understand that it's common practice, but here Shopify froze their ability to withdraw but still took orders.
tzs 4y ago
To the processor and other entities such as the credit card companies and banks that are involved with processing the transaction there isn't much difference between a refund and charge. Both use most of the same resources on the same infrastructure the same way in the same amount. If you had a deal where you were directly exposed to all the fees involved, what I'd expect is that you net fee on a transaction would be composed of fees from three different categories. 1. Per transaction fees that apply to both charges and refunds. 2. Fees proportional to the charge amount that apply to both charges and refunds. 3. Fees proportional to the charge amount that only apply to charges. On a charge you'd pay the fees from all three categories. On a refund you might get back the fees from category #3 you paid on the charge, but you'd again pay the fees from category #1 and #2. For example if you sell an item for price P and the fees from the three categories are F1, F2, and F3, your net gain on that transaction is P - F1 - F2 - F3. A refund transaction has a net gain of -P - F1 - F2 + F3. That would bring your total net for the combined charge/refund to -2 F1 - 2 F2. This we should expect some net fee for a charge followed by a refund. For small transactions that net fee could be up to almost twice what the fee was for the charge alone. Most processors though don't directly expose you to all the fees. That's because there are a bazillion different possible fees with each different subsets applicable to any particular transaction. So most processors expose a simplified structure based on averages over a large number of transactions across similar merchants. Most merchants prefer that. When doing such a simplified fee structure, they could set charge fees based on the average for F1 + F2 + F3 and refund fees based on the average F1 + F2 - F3. But refunds should be much less frequent than charges, so it seems find to me when doing a simplified fee structure to just average the refunds in too, and just deal with fees on the charge side of things.
- nickjj 4y ago
  Yeah, I wonder what provoked both Stripe and PayPal to start doing this after not doing it for like 10 years. They both did it pretty close to each other from what I remember.
  - archon810 4y ago
    Greed?
dashesyan 4y ago
I don't know about Stripe, but PayPal refunds PayPal fees if you refund the customer. Net amount in and net amount out are the same.
- eurleif 4y ago
  >PayPal refunds PayPal fees if you refund the customer. Your information is outdated. PayPal keeps the fees now. https://www.theverge.com/2019/9/20/20876570/paypal-refund-fee-policy-change-sellers-controversy https://www.theverge.com/2019/9/20/20876570/paypal-refund-fe...
  - dashesyan 4y ago
    Maybe on new accounts? I looked in my paypal portal and they are still refunding fees for my refunds

by nickjj 4y ago

jeromegv 4y ago

Yep. It’s very sad for the owner. And I empathize. But a lot of things they blame shopify for is actually the exact same across the ecommerce spectrum.

voiper1 4y ago

I understand that it's common practice, but here Shopify froze their ability to withdraw but still took orders.

tzs 4y ago

To the processor and other entities such as the credit card companies and banks that are involved with processing the transaction there isn't much difference between a refund and charge. Both use most of the same resources on the same infrastructure the same way in the same amount. If you had a deal where you were directly exposed to all the fees involved, what I'd expect is that you net fee on a transaction would be composed of fees from three different categories. 1. Per transaction fees that apply to both charges and refunds. 2. Fees proportional to the charge amount that apply to both charges and refunds. 3. Fees proportional to the charge amount that only apply to charges. On a charge you'd pay the fees from all three categories. On a refund you might get back the fees from category #3 you paid on the charge, but you'd again pay the fees from category #1 and #2. For example if you sell an item for price P and the fees from the three categories are F1, F2, and F3, your net gain on that transaction is P - F1 - F2 - F3. A refund transaction has a net gain of -P - F1 - F2 + F3. That would bring your total net for the combined charge/refund to -2 F1 - 2 F2. This we should expect some net fee for a charge followed by a refund. For small transactions that net fee could be up to almost twice what the fee was for the charge alone. Most processors though don't directly expose you to all the fees. That's because there are a bazillion different possible fees with each different subsets applicable to any particular transaction. So most processors expose a simplified structure based on averages over a large number of transactions across similar merchants. Most merchants prefer that. When doing such a simplified fee structure, they could set charge fees based on the average for F1 + F2 + F3 and refund fees based on the average F1 + F2 - F3. But refunds should be much less frequent than charges, so it seems find to me when doing a simplified fee structure to just average the refunds in too, and just deal with fees on the charge side of things.

nickjj 4y ago
Yeah, I wonder what provoked both Stripe and PayPal to start doing this after not doing it for like 10 years. They both did it pretty close to each other from what I remember.
- archon810 4y ago
  Greed?

dashesyan 4y ago

I don't know about Stripe, but PayPal refunds PayPal fees if you refund the customer. Net amount in and net amount out are the same.

eurleif 4y ago
>PayPal refunds PayPal fees if you refund the customer. Your information is outdated. PayPal keeps the fees now. https://www.theverge.com/2019/9/20/20876570/paypal-refund-fee-policy-change-sellers-controversy https://www.theverge.com/2019/9/20/20876570/paypal-refund-fe...
- dashesyan 4y ago
  Maybe on new accounts? I looked in my paypal portal and they are still refunding fees for my refunds