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Square to no longer return processing fees when buyers are issued a refund
- vinarun 4y agoit was only a matter of time given that Stripe has a penalty too
- CryptoBanker 4y agoI fail to see why there’s a penalty for a refund. A chargeback would be one thing, but a refund is a totally normal business process
- kevinsundar 4y agoIt costs Square money (card network costs) to refund a transaction. It's not a penalty, it's just costs associated with moving money. Even if the money is moving the other way, there's still a cost.
- xp84 4y agoDefinitely "The way it is" -- but it does seem greedy. All systems drift toward the greediest possible implementation, though, in the absence of competition or regulation mandating otherwise, of which we have neither.
- crazygringo 4y agoIt's not a penalty, it's just a cost of using the network. If you use the credit card network not just once but twice -- once to process a purchase and then yet again to refund it -- you're using that infrastructure. It makes sense you'd pay for its usage. If you drive to work on a toll road and then drive back home along the same toll road, you still have to pay the tolls even though you wound up in the same place at the end.
- jedberg 4y ago> If you drive to work on a toll road and then drive back home along the same toll road, you still have to pay the tolls even though you wound up in the same place at the end. Funny you should use that example. On toll roads you get charged in both directions, but I've never seen a toll bridge that had tolls in both directions. Usually the argument is that you really can't go any other way so the toll in one direction covers the cost of both trips. But I actually think you're right here -- most people won't make the "return trip" so it makes sense to only charge people twice that do.
- __derek__ 4y ago> I've never seen a toll bridge that had tolls in both directions. Huh, I think I've only seen this once (the Tacoma Narrows Bridge). Other toll bridges I've driven have all had tolls in each direction, e.g., Ambassador and Blue Water Bridges to Canada, Lake Washington floating bridge. Maybe I need to start taking more bridges to nowhere!
- jedberg 4y agoInteresting! I'll admit my sample size is limited to bridges in California, but at least in the Bay Area all the bridges only have tolls in one direction.
- __derek__ 4y agoThat makes sense. It fits with the Tacoma Narrows Bridge, which connects Tacoma (urban economic hub) to the Olympic Peninsula (some small towns, mostly wilderness).
- dragonwriter 4y agoI suspect the Bay Area model is more common where the dominant traffic on a bridge is two-way commute traffic that can’t easily escape the toll regime for one side of the commute. In that case, one-way tolls reduce infrastructure and operating costs, and traffic impacts, of toll collection without any significant downside.
- __derek__ 4y agoApparently merchants can avoid it with store credit: > Additionally, we offer a number of resources and tools to assist sellers in accommodating this change. Our Return Policy Guide & Templates provide sellers with guidance on how to create a return policy that best suits their business, while Square’s free eGift Cards can serve as an option for providing store credit to buyers with no additional processing fees. Meet the new boss, same as the old boss.
- they4kman 4y agoA refund _is_ a chargeback – the only difference is who initiates it. Technically, any time funds are moved onto a card, it's called a chargeback. This is how one would load a gift card, for instance. When it comes to credit card merchants, a chargeback always dings a transaction fee, and the merchant may additionally tack on a chargeback fee. So a full refund process will incur two transaction fees, plus possibly a chargeback fee.
- throwntoday 4y ago>Technically, any time funds are moved onto a card, it's called a chargeback. I've seen more companies offering a reverse debit now (not sure of the actual term). Is this not through a different mechanism? Funds are available instantly same as how they're drawn via debit vs credit.
- dangus 4y agoI wouldn't say that a refund is a chargeback in terms of the common vernacular.
- duskwuff 4y ago> Technically, any time funds are moved onto a card, it's called a chargeback. No, this is not true. The opposite of a charge is a credit.
- RC_ITR 4y agoWhich is a great reminder for all the purchasers of SaaS or other business services on here: If the terms of one provider are noticeably different than the rest (and those terms have a directly measurable economic impact on the provider), it's marketing. It will likely get pulled as soon as the provider is at a large enough scale that they no longer need that marketing.
- aveline 4y agoStripe doesn't refund the processing fee too. > Depending on your fee schedule, you may incur fees to refund a charge. Additionally, Stripe's processing fees from the original transaction will not be returned in case of a refund. https://support.stripe.com/questions/understanding-fees-for-refunded-payments https://support.stripe.com/questions/understanding-fees-for-...
- jkaplowitz 4y agoStripe made this change recently, I believe. It looks like Square is following Stripe's change.
- sparrish 4y agoThis is now pretty standard across the industry. PayPal made the same change last year.
- brianwawok 4y agoSadly users still expect refunds for any reason. Charging a 3% fee on a refund is a cause for a shtfit.
- AlexandrB 4y agoWhy sadly? This is basic consumer protection stuff. It seems like currently this fee ends up being paid by the vendor or some middleman, but that seems like BS too. Visa/whoever should be returning the fee and folding it into their business model as the cost of doing business.
- Red_Leaves_Flyy 4y agoOur businesses should be doing more to prevent refunds. The sheer amount of trash every large company makes is sickening.
- crote 4y agoEven if you do everything you can to prevent it, you still incur refunds. It is simply impossible to get everything right 100% of the time - not in the least because people keep buying the wrong items. Things like cancelled or modified orders happen all the time, and you can't really do anything to prevent those.
- Red_Leaves_Flyy 4y agoAnd that sounds like the cost of doing business to me. For especially egregious cases the companies should reserve the right to charge customers for being stupid and wasteful.
- 4y ago
- bombcar 4y agoDoes anyone know if the "real big" merchants like Walmart have to pay the fee? I assume they're so large they can sit on the processors and squeeze them (I know Costco does, they pay 0% fees in-store because Visa is so hungry to be their processor).
- jedberg 4y agoBased on this article it sounds like they pay enough to want a law to make it less: https://www.cnn.com/2022/09/20/business/credit-card-fees-visa-mastercard-retail/index.html https://www.cnn.com/2022/09/20/business/credit-card-fees-vis... Costco gets away with 0% because they offer exclusivity and because they cover some of the cost of the rewards programs. I guess Walmart et al did the math and figured they would lose too much business. The average Costco shopper makes over $100K a year, so getting another card just to shop there isn't a problem for most. Can't say the same for Walmart.
- bombcar 4y agoI was specifically wondering about the refund cost; I wonder if Walmart is eating the 1-3% on all refunds (I suspect the stores that DO eat it are the ones that really want to refund as store credit).
- ajaimk 4y agoWalmart pays a lot less than 1-3%
- DaiPlusPlus 4y ago> The average Costco shopper makes over $100K a year... While technically true, that statistic is misleading as it requires further qualification, namely that $100k figure only applies to shoppers in Costco's PNW area - not nationwide, and certainly not internationally.
- jedberg 4y agoNot sure why you think it PNW only. The number came from the CEO of AMEX, back when they were the exclusive credit card provider for Costco. He said, in 2015, that the average Costco card holder made $100K a year. So presumably that would be in all of the US. More recent attempts at analysis put the number closer to $125K these days for all their customers worldwide. Which makes sense, given inflation and the fact that they only build Costcos in more affluent areas and target business owners.
- DueDilligence 4y ago[dead]
- latchkey 4y agoThis will affect businesses that do 3rd party merchant services, like events. If the event is cancelled, refunds are issued. Who pays that fee? It would be up to the business to try to claw back funds from the promoter of the event... who is now bankrupt from not being able to do their event. It gets ugly fast.
- gowld 4y agoThose businesses don't get a refund on their electricity costs from cancelled sales.
- Red_Leaves_Flyy 4y agoPoor poor ticket master.
- MichaelZuo 4y agoIt's a genuine point, they did incur non-zero real costs to process the order then the refund. Low effort trolling doesn't help anyone.
- Red_Leaves_Flyy 4y agoI’m not trolling. Ticket matter is a criminal organization engaged in quasi legal extortion and racketeering.
- samwillis 4y agoI think that's why (well one of the reasons along with generally poor behaviour) most ticketing sites tag on so many extra "service" charges. Some charge to even receive a digital copy of your ticket! I believe they don't have to refund these charges when the event is cancelled.
- latchkey 4y agoThe extra fees are simply a way to gouge end users. It has nothing to do with refunds and it is also often out of the control of the promoter of the event. When I built an event ticket sales site, we tried to get promoters to just raise their ticket prices a bit to include the 'service fees' so that end users got a single price, and they refused. Promoters just want to advertise $25, not $32.50 (contrived example)... they don't care that the end user has to pay the additional fee. We did all of the math analysis and the end user total cost could have been lower, while the promoter got more money, with our method, but perception is king.
- jarym 4y agoI guess the days when refunds were frictionless so that consumers could purchase with confidence are gone? Refunds have always been a cost of doing business - it just seems the processors / card companies want to change the rules and have their cake and eat it now that cash is mostly dead.
- gowld 4y agoRefunds are still frictionless for consumers. It's vendors who have to maintain product quality and prevent fraud to avoid returns. It's not Square's job to make sure that a vendor's product is high-quality or that customers really want to keep the products they buy. Credit cards mostly work the same way. https://www.cardfellow.com/blog/credit-card-refund-fees https://www.cardfellow.com/blog/credit-card-refund-fees
- peanuty1 4y agoTo be fair, sometimes people return stuff for arbitrary reasons like changing their mind.
- crote 4y agoYes, and that's totally fine. That's part of doing business and stores already take that into account. However, the web shop I work at pays a 3% processing fee on returned payments initiated by us. It just makes no sense.
- Alupis 4y agoI don't know who your current processor is, but if you have any real volume, get off Square/Stripe if that's where you are at. Their rates are awful for volume sellers. Square approached us a few years back and could not comprehend why we weren't jumping at their offered 2.6% + $0.35... "but the AI!?!?" is all their sales people could come up with. We're well below 2% + $0.20 per transaction for all cards (including AMEX, believe it or not). Square/Stripe and the rest are great for being Turn-Key for new businesses. But for anyone with real volume, they are a joke.
- LatteLazy 4y agoDevils advocate: this penalises businesses with a LOT of refunds. Which is probably a good thing. Because they generate a lot of work for square and are doing something wrong commercially (misadvertising?). And SHOULD be discouraged...
- gowld 4y agoWhat work do they generate for Square? It's not really "Devil's" advocate to advicate for the current standard practice across the industry.
- LatteLazy 4y agoDealing with disputes usually requires a lot of human manual intervention and had a high rate of bad publicity.
- nerpderp82 4y agoRefunds, not disputes.
- Dayshine 4y agoHow is this going to work for businesses in the EU where customers are allowed to refund for no reason when buying things at a distance?
- kasey_junk 4y agoBusinesses will increase costs to cover it, just like they do now.
- Silhouette 4y agoHow will that help in the scenario the GP described? The businesses would still have to refund those higher charges.
- suzakus 4y agoI think the scenario is that in the case of normal purchases, your profits need to be higher to cover these fees on any returns.
- Eisenstein 4y agoEveryone pays more for everything the retailer sells until their revenue and costs ratios match roughly as they did before, with variation depending on competition intensity and elasticity of the products sold.
- dylan604 4y agoEveryone else that bought something at the higher prices covers the fees when the much smaller number of people request the refund. So it is essentially crowd funded
- crote 4y agoRaised prices. The company I work for alrady has to pay a 3% charge on payment returns. Take 3% of the product price, multiply by the expected rate of return, and add that as a hidden fee to the new product price.
- yashg 4y agoPaypal and Stripe have been doing this for a while.
- deleted 4y ago[deleted]
- nikolay 4y agoWell, they launched as a PayPal alternative, but now they are copying all the negative features. Anyway, we've stopped using Square long ago given their obscene policies. One such policy is charging $70 per month for "team access"! That's absolutely crazy to put a basic feature under a greedy paywall! So, basically, they force people to share logins! Add the rate hikes, now this! Sorry, but there are alternatives such as SumUp, Stripe Terminal, Clover, QuickBooks, etc. In fact, if you want the lowest swipe rates, go with QuickBooks!
- cwkoss 4y agoSounds like the real villains are the credit card companies who have the market power to enforce fees on cancelled payments. They are so entrenched no one is even questioning their position anymore. Visa and Mastercard are massive drains on our economy - it's ridiculous how unquestioningly their 3% tax on commerce is accepted.
- pcarolan 4y agoIn Australia, this is regulated and they can charge no more than 1.5%. https://www.accc.gov.au/consumers/pricing/card-surcharges https://www.accc.gov.au/consumers/pricing/card-surcharges This could be changed overnight with 1 piece of legislation.
- SQueeeeeL 4y agoThe American system is too deeply tied to capital to have a policy that actually helps citizens and small businesses get passed. The second a government official proposed something like this, the espionage arms of the credit card corporations would come down so hard on them and arrange for them to fail their next appointment (through "lobbying")
- unglaublich 4y agoCC companies are genius. They charge companies 3% -> companies embed that 3% in their prices -> customers get a 1% refund from CC companies. - If you do NOT use a CC, you effectively pay _more for CC users_ (3%!). - CC companies make the customer feel like they have a benefit, while in fact, they are net payers too (2%). - They have access to all (private) data of the customer, which is extremely powerful in this age and time.
- mihaic 4y agoI honestly have no idea how the hell the US public is still deluding itself to not make this illegal. Are the only ones that get it so content with their 1-2% pieces of silver that they're fine in trading the wellbeing of the less fortunate?
- charles_f 4y agoI guess this will get back to the consumer, either by having to shell out these fees, or by merchants refusing to refund altogether. The one thing I am wondering is whether PayPal and stripe will follow
- caleblloyd 4y agoI learned the hard way in March 2020 that PayPal doesn't do this anymore either. I was helping an organization raise money for a Charitable 5k when COVID shut everything down. This was when everyone thought the world was ending still so we didn't think to change it to a virtual 5K. Refunded all payments on a couple thousand dollars and was out around 4% in processing fees.
- ashwagary 4y agoIt seems any victim of a decent sized "card testing" attack will pay a heavy price. They just removed their last incentive to protect against this kind of fraud by forwarding all the costs to their clients.
- computing 4y agoUh, if only there existed a neutral, owned-by-no-one, decentralized monetary network with instant low-cost transfers and finality. Too bad this sort of stuff is out of science fiction. EDIT: aaaand I'm being downvoted :) At least leave a comment.
- napsternxg 4y agoWhy cant US have something like UPI [1], which significantly reduced reliance of credit card companies and extra payment traaction fees in India. Is there some regulation holding this back or no state or federal government has tried it yet. [1] https://en.wikipedia.org/wiki/Unified_Payments_Interface https://en.wikipedia.org/wiki/Unified_Payments_Interface