Refund of credit card transaction and the fees

@AshSab1903  Hey, those yachts aren't going to afford themselves.

I have been using PayPal for years and have done several refunds but never got charged a penny for such refunds.

I can imagine the hurdle you've been through regarding the credit card refund and fees, Ash. I'll make it up to you by ensuring you get the urgent help you need.

When processing a refund for a credit card transaction, PayPal refunds the entire transaction amount, including the initially deducted processing fee. However, please note that the processing fee from the original transaction won't be refunded, as this policy can vary among payment processors and their terms of service.

Also, reversing a payment may incur a processing fee, similar to the fees charged when accepting credit card payments. This fee is applied to cover the cost of processing the reversal.

For clarity on fees and their application in your case, I recommend contacting our Customer Support Team again. They can provide detailed guidance on the fee structure and help address any discrepancies you've encountered. Please know that your concerns are valid, and it's important to get clarification to resolve this issue effectively.

To learn more about industry terms to help you accept credit card payments, see this link: Common terms to process credit cards.

Additionally, I recommend reviewing some of our commonly asked payment questions through this article: QuickBooks Payments FAQ.

Press the Reply button below if you have other questions regarding PayPal's refund policies and processing fees in QuickBooks. My team and I are ready to help you out.

I have had three 60-90 minute long phone calls and two online chats with your customer service but I have been unable to get a satisfactory explanation or resolution to my case. So who should I contact now?

Matter of fact is that I am out 6 hours of my productive time and out by $472. Not sure where to go to resolve this.

@Maybelle_S  You said: "When you process a refund for a credit card transaction, PayPal refunds the entire transaction amount, including the processing fee that was initially deducted."

What, exactly, does PayPal have to do with how QuickBooks handled this refund?

@AshSab1903  RE: I was left holding the bag with two charges of $236.40 so total amount I am out by is 472.40.

Yes, this is the standard way it works. I'm not sure why the reps you talked to don't know that.

Merchant services charge you both for charges and refunds. Almost any time money moves you, the merchant, get charged. My merchant service (not Intuit) does the same thing. I think they all do. Really, it's Visa, MasterCard, AmEx and the other card issuers that charge much of that fee. Your merchant service can't really do anything about that. They're the middle-man.

(PayPal is different, because when they charge you to accept a payment, it may be from the customer's PayPal balance, or a transfer from their bank account, and in those cases PayPal gets the whole fee, so they are free to give it back. I'm not sure what they do if the customer actually used a credit card to fund the purchase.)

Depending on the common practices for your business type, and the circumstances of the return, you may want to consider reducing the refund to the customer to cover some or all of these charges.

For example, if the return is all on you (you screwed up) then perhaps don't charge the customer a fee. But if the return is more on the customer (say they buy three of something - like three pair of the same pants in different sizes - fully intending to return two of them), then perhaps charge a fee when they do that.  Your case, where the customer used the wrong card, might be more in that latter category.

Some businesses, for example, charge a 10% "restocking" fee for a return, which would more than cover the 7% you paid the merchant service. Or, you could charge a 5% fee to cover most of it. Or something like that.

Or perhaps you could tell customers up front that if they return something purchased with a credit card, there's a 7% fee. But if they purchase with a check, then no fee. That sort of thing can work for some business types.

Another tactic to reduce the fees is to always or usually refund the customer by check. You could even FedEx it to them - for a whole lot less than $236!

Also, some businesses limit the amount that can be charged to a card to help limit fees on large purchases. For example, auto dealerships limit how much you can charge to buy a car. I've been limited to $3,000 or so in the past. Basically a down payment. I'd love to charge $25,000 to get points, but they won't do it 'cause they don't want to pay the fees.

I just mentioned PayPal as an example of my other credit card processor where reversal of Credit Card charges never resulted in a NET charge to me as the merchant. I find it odd that QB payment services is charging on both sides of what essentially is a NIL transaction.  I couldn't find any documentation around such charges in any of the terms and conditions.