There is one process of the return card transaction process that can be the tensest on both the customer and merchant sides of the ordeal. This part is the credit card refund process, there are a lot of intricate parts of the process that knowing the details can assuage. By knowing the process and understanding it to the fullest you as merchants and your team will be able to have a better relationship with your customer whether dealing with a brick and mortar situation on an online store. In this article, we will be looking at the process and some of the peripheral knowledge that will benefit you and your team regarding this part of the entire credit card process. The knowledge you will gain van also helps you and your team will be able to protect your bottom line as well as the important relationship you have built with your customers.
Players in the Process
There are several people involved in this process. Each plays their part and are a vital part of making this process run smoothly. Here are the players in this process:
- Cardholder
This is the customer that used the card on the transaction.
- Merchant
This is you. The individual that sold the product to the customer.
- Issuer
This is the bank that gave the customer their card.
- Acquirer
The bank that oversees getting the money on your behalf.
- Card Association
This is the card company that oversees the entire transaction.
There are other people involved with the process, but these are the key players. Now that you have an idea of who is involved, we can take a good hard look at the process itself.
How does it work?
You are a customer in some ways during this process as well. After the customer has decided that whatever product they purchased is simply not working for them and they have shipped or brought it back to you the process begins anew. The first part of this process is the return policy that not only works for you but the customers as well. Once the criteria of the return policy are met and the transaction is begun there are a few things that you as the merchant should understand from the customers part of the process.
- The time of the transaction can influence the return. If it is at the ends of the billing cycle, they may still end up paying for the transaction before they get a refund in the transaction. This transaction may show p on the next bull as a refund this is not due to your business but rather the card issuer.
- The customer may not get the entire amount back, some merchants and banks charge a refund fee.
Now that you as a merchant understand a few key things that may affect the customer let us look at the process form your side of the transaction.
- The customer comes in or sends in the product that they want to return.
- Processing it through your gateway or your POS system you follow your companies’ policies and procedures to allow for the return.
- The transaction is then sent to your merchant account and the appropriate fees are charged to you and removed from your account which is then sent to the customer’s card association.
- This card association passes the transaction off to the issuing bank. Here the money is returned and will be shown on the closest bill to the transaction completion. The money may take up to a week to return to the credit card holders account. Once it does the transaction amount will be placed back on the credit card.
The process is quite straightforward and easy to understand. There are a few considerations when going through this process.
- Some merchants opt for a minimum transaction amount where it is possible to give money back for the product.
- Most of the time reward points or sign up bonuses will be not be included in the return.
- If your customer returns an item that was purchased in a foreign currency you may not be able to complete the transaction or you may only be able to return the amount of money equal to where the conversion rate sits at on the day of the return.
Credit Card Return Fees
The customer receives every cent they spent but you may find an extra fee appears on your end. Many of the processors or credit card companies charge merchants a fee for being able to process credit card transactions. In the processor returning this product, not only did you get charged for the initial transaction, but you may get charged as well for the return transaction. These flat rates show up on your statement and can build up over time. You will not be refunded your fees and will be out that money. This is dependent on your processor so knowing what fees are included in the return process will help you and your team understand and be able to monitor the bottom line.
In the end, you can combat the credit card fees that could mount up when dealing with returns by simply going with the right processor. Tough that is not the only thing you should look at when trying to choose a processor for your credit card transactions. The actual way to combat these hidden fees is to try to decrease the risk of returns by having excellent customer service and a return policy that suits both you and your customer’s needs.
Final Thoughts
Understanding al the processes that go into the setup or the running of your merchant business is vital for every member of the team as it is a way to ensure excellent customer service and the ability to monitor the bottom line. This s especially important in the transaction process and even more so when dealing with credit card transactions and refunds. Hopefully, you feel better armed to deal and to understand the process after reading this article.