thread Re: Seller Processing Fees charged on Refunded Transactions in Customer Engagement

Seller Processing Fees charged on Refunded Transactions

RP001 — Sun, 21 Sep 2025 11:46:26 GMT

Is there awareness regarding the new policy concerning online refunds and processing fees still being charged? We are concerned about the implications of these changes, as they appear to limit our ability to provide comprehensive customer service by restricting backend capabilities for order adjustments. This situation raises questions about equitable treatment and appears to prioritize Square's fee collection over customer satisfaction.

Could someone provide insights into how other sellers are managing this challenge? What aspects of this scenario should we consider that may not be immediately apparent?

Re: Seller Processing Fees charged on Refunded Transactions

ryanwanner — Wed, 26 Jun 2024 16:12:33 GMT

Hello @RP001

While I agree that this is not a good thing for us sellers, I do know that this is industry standard for card processors.

The logic is that there is processing power needed to apply the refund and send the funds back to the customer, so the costs of that are passed back to us sellers. Is it worth the whole processing fee? Probably not, but that's how it works right now.

Your best bet is to limit the number of refunds you do. If you're invoicing, you can always set up nonrefundable deposits. You can utilize open tickets where you don't collect until the entire transaction is complete as well. Overall though, your best bet is to adjust pricing to compensate for the refunds. If on average you refund $1000 over 10 tickets through the month, your additional fees are $27 (assuming 2.6% + 10¢ fees). Take that amount and spread it over all your tickets for the month and bump your pricing by that amount. Then your refund transaction costs are covered.

Re: Seller Processing Fees charged on Refunded Transactions

Donnie-M — Wed, 26 Jun 2024 16:16:46 GMT

@RP001 I am sorry to say this policy actually went into affect last year.

https://www.sellercommunity.com/t5/Product-Updates/New-Square-Refund-Policy-Update/ba-p/642210

The issue here is that several other large 3rd party processors/merchant of record had been doing this (Paypail & Strighpes) Square just got to the party a little late.

Does it stink? Yes

Does square have to pay MC/VS/AMEX even when there is a refund? Yea, there are costs associated no matter what to square.

I think the key thing with the change was to make sure you have factored in all the costs of your product and including returns. If you are using the completely free version of the point of sale then you only pay when you do a sale anyway. For these situations it truly is a "cost of doing business". I tend to believe that I would get a lot of value out of the very low cost of entry to use square products. Not everyone will agree with me, but it is the nature of market. I believe firmly in free markets, and if there is enough people to support another company to compete on this issue, it wouldn't be an issue, but unfortunately for us the market says this is ok.

Re: Seller Processing Fees charged on Refunded Transactions

RP001 — Wed, 26 Jun 2024 17:07:28 GMT

I apologize for any confusion caused and appreciate the opportunity to clarify our current challenge regarding processing fees for refunds, particularly in the context of online orders.

At present, our experience with Square's backend system presents a unique obstacle. Once an online order is placed, we are unable to modify it through their platform. This limitation necessitates issuing a refund for even minor adjustments, such as updating delivery details or addresses.

While we are actively pursuing resolutions through our open tickets with Square, there remains uncertainty regarding the effectiveness of these efforts, especially concerning online orders. Our primary concern revolves around the compulsory refunding process, which includes charges for delivery fees and tips, despite these funds not initially reaching us.

Re: Seller Processing Fees charged on Refunded Transactions

RP001 — Wed, 26 Jun 2024 17:09:40 GMT

Please let us know if there are any insights or alternative approaches you might suggest to mitigate this challenge effectively.

Re: Seller Processing Fees charged on Refunded Transactions

RP001 — Wed, 26 Jun 2024 17:38:13 GMT

I apologize for any confusion caused and appreciate the opportunity to clarify our current challenge regarding processing fees for refunds, particularly in the context of online orders.

Please let us know if there are any insights or alternative approaches you might suggest to mitigate this challenge effectively.