I had a customer order almost $6,000 in product and then emailed and cancelled the order. I was billed today for over $150 from Shopify because they won't refund the credit card processing charge. Is this correct? If so, how do I migrate all my websites from Shopify to another platform that doesn't extract unnecessary charges like this?
Hey @waterglider99 ,
This is correct, yes. They do not refund the credit card processing charge.
They facilitate the transaction to go through, do fraud prevention, ensure that the transaction is secure (i.e. your customer's credit card info is safe), and also have developers working around the clock to make sure that your customers can order from your store 24/7 - these employees need to be paid.
Other platforms won't be different since whoever your payment processor is will always take a % of every transaction and will not refund it if your customer makes a return.
Shopify and card processing merchants are taking advantage of refund situations. While the vendor pays 100% back to the customer, Shopify and card merchants keep the initial transaction fee. For large orders, the amount is significant. For example, Leviosa sells motorized shades and home automation systems where our average transaction is $3000+. For order cancellations, the fee we still must pay is~$90. This is patently unfair, but Shopify and card merchants are not motivated to change it. This money-grab is new from 2019.
However, Shopify vendors have recourse: promote payment by check. As an example, Leviosa now promotes 2% additional discount to customers who pay by check. Customers are more encouraged to buy with the extra discount, which does not cost Leviosa anything as we avoid paying Shopify and merchants at all. In fact, Leviosa actually makes a few extra dollars. Sure, many customers still want to pay by credit card, but 15%+ are choosing to pay by check, cutting Shopify out of the payment process, and minimizing some refund fee risk. Check processing happens instantly as customers email us pictures of check front and back, which are then transferred electronically to our bank via common check deposit Apps nearly every bank now offers. No snail mail - Easy, and quick. We estimate Shopify and card merchants stand to lose $15,000 in fees alone from Leviosa this year - against refund fee charges of $1000. Small peanuts to them, but when other Shopify vendors promote similar systems, maybe they will see their short-sighted venture. And while they should revert back to a more fair refund fee policy anyway - we will continue promoting check acceptance - our customers love discounts! A shame Shopify vendors have to plot to cut Shopify and card merchants out of the process - but their greed has unintended (and unprofitable) ramifications.
I couldn't agree more. I only just realized about this horrible policy - and it bites!
Can you please tell me which service you use to offer check payments?
Very simple: Customer takes a picture of their completed check and emails it to you - both front and back side. We screenshot the image from the email and directly deposit to our bank account via their App (such as BBT or other). Takes 1 minute or less. No stamps. No US mail, No delay. Best of all - no transaction fees. You do not need a third party App other than your normal bank App - and nearly all major banks now accept check images for deposits.
Update 7-21: Turns out banks do not like when images of images are submitted for deposits - they claim that increases fraud potential. But they accept check images already. Not very consistent policy. We understand we have negligible sway on their policies.
Instead, we now we accept ACH transfers - eChecks. In fact, a better system since customers enter their bank account info (same as already printed on each check) via secure server. Advantages:
- Lower transaction fees (QB offers 1% fee, max $10) - far less than Shopify charges for cards . A $3000 purchase costs us $10 with ACH, vs $80 with cards.
- Secure for customers. We never see their data, protecting them and us.
- Easy for customers: No writing checks, no stamps. Just type check info, as is similar process for cards.
- Fast speed: no slow mail - processes instantly
- Avoids lost fees for refunds
- Avoids potential card chargebacks that consume time and always seem to resolve in the customer's favor
Shopify can increase value to its merchants by also offering ACH transfer for seamless payment integration - no issue that can do it if they wanted as others do it today. But I doubt they will because of the money factor: they make slightly less money on ACH transaction fees. So we merchants will find a way around Shopify, as we tend to do.
Update: We significantly UNDER estimated customers' positive response to paying via check. We measure 60% transactions completed via check over past 5 months. Customers love discounts, and understand they save when not paying bloated credit card vendor fees. Win-win for everyone (well, except Shopify and credit card processors). During covid-19 with more people directing entertainment budgets to home improvements - such as the motorized window shades Leviosa sells - business is booming, and selling fees are shrinking. Should have done this years ago.
Shopify, your employees ARE getting paid for their time...through our monthly fees. You keep taking MORE AND MORE away from us and charging us more. This is robbery. We eat all kinds of costs as small businesses. Why can't you join us at the table and eat a small credit card fee instead of sticking it to us. You realize, if we don't thrive as businesses, you make less from us until we fold and you get zero. So how about some support instead of constantly finding ways to stick it to us. Your credit card processing systems are automated and don't cost THAT much more, if anything, to process the transactions that eventually get cancelled. Why should we pay for that. That's absurd. That should be factored into your cost of doing business. Looking into a new platform immediately after I type this. Tired of being nickel and dimed to death by shopify:(
Just found out about this today. This is ridiculous.
Also when contacting shopify they said it was new policy since april 2021.
Are there any alternative platforms who still refunds the charges?
> They facilitate the transaction to go through, do fraud prevention, ensure that the transaction is secure
> (i.e. your customer's credit card info is safe), and also have developers working around the clock to make
> sure that your customers can order from your store 24/7 - these employees need to be paid.
And they get paid for this with monthly fees as well as cc fees on ALL non-canceled transactions. Charging fees on Canceled, refunded orders is just a robbery. Credit cards pay them back and they just keep it together with their margin. This is so flawed and should be illegal. Any merchant's competitor could in theory start making large orders and canceling them.
Can you please tell me the exact percentage for the card processing fee that is Shopify payment charge?
I did a test order and test refund of an item for $0.86 and it literally charged me $0.32 out of the $0.86 to do the return.
That’s a 37% return fee???
Please make this make sense?
That will be the 30 cents transaction base fee + the percentage that they charge on top of that. The 30 cents really cut deep for low value orders.
Sorry, but I think this answer is plain stupid. That is like saying a restaurant should charge, besides service fee, a chef fee, because the chef cooks your food, puts it safely on the plate, make sure that it is not poisoned, and make sure that all guests are fed.
1. Shopify already charges a fee for using your service. You are charging another layer of fee for a transaction that is eventually cancelled (and the shop owner is not even in control of it). It does not take someone with high intelligence to understand whether this makes sense or not.
2. Most POS payment systems charge for credit card and digital payment transactions but fully refund the transaction fee if the transaction is cancelled (within a timeframe). Take PayPal as an example (which is notoriously bad enough for their service), they still fully refund transaction fees if a transaction is reversed.
Hate to tell you, but paypal retains their fees even if a refund is given as well. That is why I don't use paypal. SQUARE is the only service I've found that still refunds transactions fees... for up to a YEAR!!
is that right?? I have not used PayPal for a long time. I used them only when they were still the partnering gateway for eBay. That's a shame on them!
Do think this is a flawed justification. The credit cards make profit at a cut of merchant’s sales. However, once transaction is done, merchants may still be subjected to refund situations which may not be of their own fault. What the banks do is to merely ensure that their get the profit regardless if the merchant is actually getting a profit. For reference, the 2 largest online platforms in China Taobao and JD charge 0 fee if the transaction gets cancelled. Not to mention that despite its profit skyrocketing, Shopify increased the monthly fees for at least twice without providing more services to merchants (enlighten me if any). Time to look out for better platform than Shopify.
The reasoning in this answer just doesn't make sense! Shopify charge the transaction fees when an order is cancelled, even if it's flagged by Shopify as a fraudulent order. Therefore, the reasoning doesn't hold true. We just had another order which is clearly fraudulent, but not flagged by Shopify, which they will charge a currency conversion fee of 1.5% in addition to the regular credit card charges.
If an order is cancelled for fraud, it's only fair that Shopify does not charge transaction fees.
Any updates on this policy? As a small business this is a very big deal to us and a huge montly expense. This was never the case years ago and I can't imagine this is acceptable to Shopify merchants. Does anyone know of any groups that have been formed to lobby for change with Shopify?
You have to understand - Shopify does NOT care. They will not respond this thread (see any?), they will not take your calls. Only YOU can find a different pathway, AROUND Shopify. When enough of us do, and we pinch their money stream, then they might pay attention.
While this is unfair from Shopify, the only option to protect you from such charges is to include them in your Refund and Return Policy. You won't have any other option than to charge it back to your customer.
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