Card payment is costing merchants more than they realise
No matter the size of the company, refunds are a part of doing business. Every merchant and customer have encountered these types of transactions. Customers usually want a refund when they are obviously not happy with the service or product they’ve received. Refunds can be processed in a more elegant approach, saving huge refund costs, and delighting shoppers with instant refunds which results in returning customers.
When a customer uses his card to pay on your webstore, the merchant typically incurs some costly fees to process the transaction. In a situation when the customer wants a refund, then the merchant must consider the loss of a sale, and the ecommerce platforms refund policies which results in substantial losses for the merchant.
What are the costs associated with card payment refunds?
Besides the obvious loss of a sale and the customer dissatisfaction, merchants also incur additional costs depending on the card processor. Assuming a merchant is using the services of a card processing company like PayPal or Stripe, that charge 2.9% + 0.30p and 2.9% + 0.20p respectively, depending on the card being used. Issuing a refund to a customer will not refund the merchant the original transaction fees. Thus, having a lot of refunds will cripple your revenue in more ways than one. These fees will differ with payment providers, some will charge a flat amount for each refund and return the original transaction fees.
Merchants should also consider the return policies, shipping fees, restocking fees and the other costs associated with a refund. If the customer however did not receive a smooth refund, they might also file for a chargeback, which will cost a merchant even more fees.
How do refunds work with ShoppingOS payments?
Regardless of the industry you operate in, refunds are bound to happen eventually.
The beauty of facilitating account to account payments is that refunds are just another payment. With ShoppingOS you get access to a dashboard with all your payment orders. It allows you to issue partial or full refunds in a matter of seconds for a flat charge of £0.50p per refund issued.
Here are the steps of issuing a refund via ShoppingOS:
- Find the Payment Order associated with the sale.
- Issue a complete refund, or a partial refund via the dashboard.
- Approve the refund with your Banking app.
As a result, the customer receives his refund in minutes, and doesn’t have to wait days or weeks for his money.
Benefits of ShoppingOS refunds for Ecommerce merchants
Full control over refunds process
Ecommerce businesses would benefit from having full control over their refund process. Being able to set and control the terms of the refund would decrease unexpected disruption. Dealing directly with the buyer/payer as opposed to a credit card company, bank, or other payment provider, who have been instructed to retrieve a refund.
Increase customer loyalty
Another benefit is that money passes from bank-to-bank, meaning there are no waiting times for middlemen to pass money from merchant accounts on or unnecessary fees. This, in theory, would allow businesses to be more efficient in the refund process and predict the timeframe more accurately. Most customers expect a refund process to be fast and frictionless, just like their shopping experience. Having a frictionless refund process might give a merchant another shot of returning the customer. Slow refunds might be costing the merchants a lot of revenue, since:
· Shoppers must wait for their refund to arrive before making a new purchase and will likely spend more if offered a faster refund.
· Slow refunds drive irritated customers to contact customer support, this implies that business owners need to invest in hiring many customer service agents.
In summary, merchants are missing opportunities: slow refunds, a lack of consumer trust and failing to support the right payment options are all costing ecommerce merchants lost revenue and customer goodwill.
About ShoppingOS
ShoppingOS is a no-code Open Banking payment platform for e-commerce merchants looking to reduce their overall fees related to payment processing – sign up as a merchant today.
Contact us if you’d like to know more about how it works.
