More about customer returns-refunds-credit card processing fee
An item can be returned if the user is not satisfied with the purchase. In such case, card processing fee is not refunded once charged on the transaction. Generally, a credit card processing fee is charged on each transaction. Since some of the business outlets and merchants are reluctant to refund credit card processing fee which is a contention with credit card processors. However, some business people charge an additional fee for reversing the transaction.
Mostly, business outlets do not consider for losing revenue of return fee. In case they consider, it is more frustrating for the users to bear with money lost on the non-refund of processing fee, if an item is returned. Details of this article may enlighten you how to minimize loss on processing fee. After reading the article, users will be aware of new source of losing revenue and unreturned processing fee on a transaction.
It is essential to understand why processing is not reversed once item is duly returned by customers after purchase. Most obvious reason for this is banks play a vital role and utilize processing fee as their revenue generation source even though business outlets card processors ignore the fee.
In fact, processing fee system operates on the Interchange system which is not set with mechanism of reversing the transaction fee. Besides, there are other factors like legalities and issues are also involved to deal with reversing the processing fee. However, creating an accurate and effective system to reverse credit card processing fee is considered to be a gigantic task for which neither banks nor card processors are not inclined to take up to facilitate the users.
Business people , therefore are forced to learn how to minimize lost revenue on the credit card processing fee when a purchase is returned. An additional charge on the customers for refund is a better solution to tackle the problem. At the same time, strict adherence to Card Association guidelines may be kept in mind to avoid risk of losing business.
Remember to post refund fee policy near the area of check out or sale, clearly visible to the users.
Even though Card Association insist on the posting of policies and returns of sales, you may also consider to printing and posting of refund fee policy on the sales receipts also.
Return fee is nothing but a percentage of amount charged on the actual purchase.
To maintain the accuracy of processing fee, return fee shall be charged on the actual price of the purchase. It is not proper to make profit out of return fee which can be marginally fixed balancing all other relevant factors. Generally the number derived will be 4% for card present merchant and 5% for card not present merchant. This percentage can be derived only after thorough study of merchant account contract and qualified/non-qualified rates.
Return fee may be charged on all types of cards or not at all.
While considering merchant service contract, you can not discriminate other mode of payment like cash or check. You must impose return fee on all types of payments chosen by the customers.
More information and facts on the subject of no fee credit cards plus apr credit card
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