I am lately dealing with Payment Gateways such as Stripe, Paypal, WorldPay and so on, and what made me wonder is whether there is some well-known model for businesses explaining how to deal with the fees involved.
Let's take Stripe as an example.
For most of the initial (original) transactions fee is around 1.4 - 2.9% + 0.30 pence. Fair enough, however in their policy on 'refunds' they mention that most of the time refund is free of charge, however the initial processing fee is not returned.
What does it mean for the business? It simply means that if your customer paid 100 dollars, on top of that transaction was 1.4-2.9% fee charged. To simplify let's just assume that fee amount would be 3 dollars.
Now when you issue refund, you should return all 100 dollars to your customer, but in real you have only 97 dollars, as 3 dollars were taken as a processing fee by Stripe.
How businesses (especially start-ups) deal with this kind of issue? Do they cover this from their own pocket? Do they provide some clause in terms and conditions stating that customer is bound to cover this cost?
For a start-up having transactions such as 1000 - 2000 dollars, 3% fee might be quite big, so if they would be so unlucky to get several refunds per month, they could end up with a huge budget hole.
How do you deal with this on your end? I would appreciate some suggestions/solutions.
I am lately dealing with Payment Gateways such as Stripe, Paypal, WorldPay and so on, and what made me wonder is whether there is some well-known model for businesses explaining how to deal with the fees involved.
Let's take Stripe as an example. For most of the initial (original) transactions fee is around 1.4 - 2.9% + 0.30 pence. Fair enough, however in their policy on 'refunds' they mention that most of the time refund is free of charge, however the initial processing fee is not returned.
What does it mean for the business? It simply means that if your customer paid 100 dollars, on top of that transaction was 1.4-2.9% fee charged. To simplify let's just assume that fee amount would be 3 dollars.
Now when you issue refund, you should return all 100 dollars to your customer, but in real you have only 97 dollars, as 3 dollars were taken as a processing fee by Stripe.
How businesses (especially start-ups) deal with this kind of issue? Do they cover this from their own pocket? Do they provide some clause in terms and conditions stating that customer is bound to cover this cost?
For a start-up having transactions such as 1000 - 2000 dollars, 3% fee might be quite big, so if they would be so unlucky to get several refunds per month, they could end up with a huge budget hole.
How do you deal with this on your end? I would appreciate some suggestions/solutions.
Thanks!