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If the provider failed to update their cart and allowed orders of an out-of-stock item, then they should bear the gateway fee's if a refund is requested as you (the client) were in no way at fault and would have had no way of knowing that the purchase was an out of stock item.
If however, there were indications that it was out-of-stock or you spoke to them prior and it was confirmed oos but you proceeded with a purchase regardless, then the gateway fee will be a valid subtraction from the refund.
Shouldnt have charged you to begin with in that case.
But no, you shouldnt have to bear any cost. Full refund. Unless it was clearly communicated that you recieve the product later beforehand.
Usually the provider can't decide whether to refund or not the gateway cost - the gateway is the only company that decides if they recieve their share of the transaction by default, in any refund. And in several cases, that isn't really a question.
I believe that if that was left to the provider by the gateway, in most cases it could be refunded. However, it would be a loss for the payment gateway company itself. That's why it is this way.
Answering also other question: no company can refund more than the existing transaction amount to a payment card. It's simply not supported at the platform itself, at least with the two gateways I know (PayPal and Stripe).
If the failure is on the provider, regardless of the gateway fee, fee is on the provider.
For paypal example, a customer should get a full refund and the provider should pay the gateway fee, resulting in the loss for the provider
That's not how gateways work, at present. Even if a service is undelivered, and especially if it has been like that for more than some days, the gateway does take their share and there's nothing the provider can do about it.
Sorry to say, but clearly you have no idea how these systems work. You can test by yourself by creating a PayPal merchant account and see what happens with that, or via Stripe if you have a company.
In very rare cases, I've seen gateways refunding the gateway fee - refunds or undeliverables for 1/2 days. Anything past that and they don't refund the gateway fee. It is how it works currently.
thats illegal in a load of jurisdictions, the seller has to bear the cost
I always got full refund when I paid via Paypal.
I don't care the system work and you may want to read this article.
https://www.paypal.com/us/cshelp/article/how-do-i-issue-a-refund-help101
Fee is on the provider.
Could depend on the jurisdiction, absolutely. But in the UK, that's how it works. Probably in the US as well. These will be the two most common jurisdictions for a hosting company.
Can't talk about e.g. India, where that may or may not be allowed and gateways comply with local law.
Well, that article is written for a customer. I'm talking from the standpoint of the provider and saying to you in no uncertain terms that save for a few cases, it is not possible.
Accept it because it's easier. Best regards.
There is also for business.
@barbarza can pay your fees.
Those are precisely the gateway fees. What that sentence states is that that fee doesn't occur two times, it only happens once. What the customer gets or doesn't get is not correlated to this.
Usually processing fees are in the ballpark of 0,25 USD + 2/3% or something around this and that is paid to the gateway, and then a slice of that to the card network (Mastercard, Visa, Unionpay, Discovery, AMEX, etc). That's why it can't be refunded in most cases: the gateway has their own share to pay elsewhere as well.
Given that the UK was part of the EU not too long ago, i cannot imagine that this has changed. fishy
You're talking in theory, I'm talking in practice and with dozens of refunded transactions. If you don't believe, create your own company in the UK (I recommend 1stformations.co.uk) and test yourself - everything else is just mere speculation.
Best regards, and have a good day.
Thats not theory, thats the law^^ You as a business have to eat it. Since well, youre in contract with whoever you use as processor. If the refund doesnt amount to the original amount by hands of the processor, they will have an issue.
When we expect a high volume of orders and stock is limited, we place the transaction amount on hold instead of capturing the charge. If the order cannot be fulfilled within 7 days due to stock unavailability or similar issues, the authorization is released. In this case, the gateway charges no fees and the funds become immediately available to the customer.
Since this approach exists and is widely supported, this appears to be a provider-side limitation rather than a technical one. That said, as long as their Terms of Service clearly state that gateway fees are non-refundable, this is acceptable.
TBH to me this reads like they return the full amount to the customer but keep the charge for the fees on your account. But it is ambiguous as it doesn't say who they don't return the fees to. However, the customer hasn't been charged the fees, the provider has, so to be it makes sense that the customer gets the full refund and the provider doesn't get back the fee that they've already paid.
That also correlates with the very few times I've ever got refunds on things. Apart from exchange rate differences in how it appears in my local currency, I've got the right amount back in the transaction currency and any difference was just currency rate change between time of sale and time of refund.
I believe that operational risks should not be transferred to customers without any service being provided. Customers pay based on their trust in the provider, and if the provider is unable to provide the service due to their own fault (incorrect pricing or quantity), then the provider should not pass on the operational risk to the customer.
If the provider never delivered the service, the customer shouldn’t have to cover the payment‑gateway fee - that cost belongs to the provider, not the person who paid in good faith and received nothing.
I agree with you, but it comes down to the ToS and refund policy of each provider in the end
In this case there wasn't a sale nor was there a service, anything apart from a full refund is straight up theft.
The seller tried to sell something they didn't have. (Again with the caveat, there's no mention about it was to be delivered later)
What their refund and ToS policies state about refunds?
Yeah, if someone tried that on me, I'd raise a chargeback on the fee saying that no service was provided.
If I'd received a service and asked for a refund myself I'd let it slide, but not receiving an order because the provider took payment without the ability to provide service, and no warning that was the case? Ummm no, I'm not paying for their cockup.
it doesnt matter what it states. This case is the return of ill gotten gains if you so will. You tried to sell something you did not have. Simple as that. The charge should have never occured in the first place.
Crazy concept, i know. But im sure youre willing to buy the Eifeltower of me, ToS state 10% are refund fees.
The core issue is legality, not ethics. While we both agree the practice is unethical, my position is that if a user explicitly agrees to the terms and is clearly informed of the risks before placing the order, then they knowingly accept those risks. In that case, a chargeback or claim should have no legal standing, as there is informed consent and an explicit agreement.
That said, this can vary by jurisdiction. Some markets impose mandatory consumer-protection rules that override private agreements. However, from a contractual standpoint, when risks are clearly disclosed and accepted in advance, the buyer cannot later claim ignorance or misrepresentation.
As a provider systemfreaks always grants full refund, there is no point to exclude the gateway fees
If the provider fails to deliver anything at all, it is a simple breach of contract. It doesn't really matter what you agreed to at that point.
Obviously, it's different if you're ordering something that's clearly a pre-order, but not if the provider fails to deliver anything at all. Although I think there has to be some leeway, maybe a week is reasonable to provision something in the absence of any other information.
A “breach of contract” is defined by the contract itself. That’s why I’m saying that while not providing a full refund may be unethical, whether it’s legal or not depends on what the buyer agreed to and on the consumer-protection laws of the relevant jurisdiction.
This still assume that any contract would have been established in the first place. If you "pretend" to sell something and take the money, its just a crime, no real sale has taken place. You just scammed someone.
During order when you click on I agree on ToS etc that still a contract, again i am just debating the legality of the action and not if its unethical or a scam
Its not. I can put a lot of stuff on some random text box while robbing you. Thats not legally binding when the intend behind it was to trick someone under a false pretense. That ToS is only comming into effect when you actually do sale.
Would be quite hilarious if ToS would apply to crimes commited.
if its a crime or not is regulated by jurisdiction laws, you can't just state its a crime because is something we don't like
that's the harsh truth. I suggest before anyone purchases something to investigate if the seller is a registered business and always review the ToS etc documentation