Advantages and Disadvantages of Return Fees for Merchant Accounts

The return fee is charged when a buyer’s purchase is overturned and funds are brought back to their account in a ‘no more, no less’ basis. The benefits of the return fee is that it imparts pleasant customer feedback, it safeguards your e-business’ name, and it enhances customer service and refund policies. On the other hand, the drawbacks are extra business costs, downright necessity and concern, and safety issues.

Normally, return fees vary between $15-30 answerable to the credit card company and your merchant account provider. This can be seen in your billing statement after a client gives back their bought goods or acquired services. They will then ask for a refund. It typically takes seven days to complete this process however it could take longer due to some further requirements required for the refund to be acted out. Find out the pros and cons of return fee in the following subsections.

Advantages

Imparts pleasant customer feedback

This will assure your customers that you really stick to what your refund policy states. Once they tried to return certain purchased merchandise and they successfully receive the refund in their account, then they will put their trust and confidence in you. They are rest assured of a secured payment system and that they will gain their money’s worth.

Safeguards your e-business’ name

Return fees should not be seen as a mistake but it should be distinguished as an opportunity to improve the quality of your goods and services marketed online. When a customer demands a refund, it’s either he is not pleased or is not engrossed with what they purchased. Through their comments, you can upgrade your manufactured article and at the same time, pay a closer look to your available products and assuring that there are no flaws. You’ll come up with a better marketing approach. In this manner, you’ll be protecting the reputation of your online business.

Enhances customer service and refund policies

From time to time, your business will be challenged by customers who take your policy for granted since they are not aware that you, as the merchant, is being charged in exchange of their returned purchase. You can state in your policy that if a customer demands a refund, he will be charged for the return fee that is being placed in your bill by the merchant account provider. This will assure you that bogus buyers won’t be in your way. This will also pose a clarification that you don’t want any mishaps between you and the customer in the near future.

Disadvantages

Extra business costs

Without a doubt, return fees benefit your customers, which is good but it is the other way round for you. There are times when the return fees cost you more than what you are earning. You have to cut your budgets for unwanted billing statements. Since you are obligated to obey the merchant account rules, you have no other choice but to pay for whatever fees are charged in your name. It won’t only cost you the return fee but also the refund for your customers. To avoid this, make sure your policy is strictly implemented and that your products are worth their money.

Downright necessity and concern

As stated above, you are obliged to follow the rules and regulations of having a merchant account. It is your responsibility to pay for the fees and charges posted in your account or else, your business will be discontinued. In doing so, you will grant a good reputation with your merchant account provider.

Safety issues

The biggest problem of online businesses is the hackers. One day, you’ll open your account and be surprised with the random transactions processed. In the end, you’ll be paying more fees and charges. What’s worst is when you never notice the scamming at all. This is why you have to make sure that you verify your online security software and conduct a scheduled system check to steer clear from hackers and other fraudulent pursuits.

One way to have a good refund policy is to know the possibilities of having return fees. You have to be aware of its benefits and drawbacks. This will steer your business away from probable disaster.

4 Types of Merchant Accounts and How They Differ from One Another

The four types of merchant accounts are: retail or traditional merchant account; Internet merchant account; MOTO or mail order - telephone order merchant account; and, wireless or mobile merchant account. Normally, these types of merchant accounts differ in these two major aspects: on the transaction fees incurred and on the rules or restrictions that govern each type of account.

Whatever kind of business you have, there is a need to have a merchant account in order to increase and eventually maximize your sales. Whether you have a physical store, an online business, or even a mobile business, incorporating a merchant account to it will definitely generate more sales. It can attract more customers primarily because we are now dealing with a cashless society. The type of merchant account you should acquire should be an answer to the type of trade you are into. Below are the four types of accounts which are differentiated from one another to aid you in your decision-making in choosing for the most suitable one for you:

Retail or traditional merchant account

This is intended for a retail type of business like department stores and grocery stores. The card should be physically present upon item purchase, and the card should be swiped through a card terminal which should be found inside the store premises. This type of merchant account charges the lowest discount rate, but then it charges a higher rate for monthly fees.

Internet merchant account

Internet accounts are quite similar to a MOTO account in terms of rules and rates. This is the most in demand nowadays. This is because of the increasing online businesses that are sprouting. This merchant account is used by vendors to sell their products over the net. The card payments are processed through a virtual terminal or by employing the services of a payment gateway. The discount rates charged are on the medium range while the rate for monthly fees are from middle to high.

MOTO or mail order - telephone order merchant account

This merchant account allows purchase of items without having to leave your house. You can order by phone or by mail order. Its discount rate is higher. However, the other fees are low.

Wireless or mobile merchant account

This merchant account type is appropriate for mobile businesses and professionals. This is designed to accommodate payments anywhere when necessary. A mobile merchant account service is recommended for contractors, landscapers, etc. Wireless merchant account uses a credit card machine like that of a traditional or retail merchant account. The only difference is that wireless machines is using a wireless network while a retail card machine is connecting to a telephone line. When it comes to monthly fees, this a mobile merchant account offers higher discount rates, while the monthly fees are lower.

Merchant accounts are very useful to businesses. In fact, a business can even have more than one type of merchant account. It all depends on the growing needs of a particular business.