The Things Customers Do

[VakarLajos 5]

We have a 3-4% restocking fee on an item if it was purchased with a CC. Being charged 1.25% or something each time we use the thing, plus the fact that that item couldn't be sold while it was in the possession of someone else, im surprised you guys don't have one. I had to deal with this yesterday... guy bought V10 helmet for kid, he didn't want it and just wanted a full refund, didn't want to get a different helmet that we had (kid was set on 9500... we're sold out). So he wanted his full 106 dollars back on his helmet (tax included). I'm like we have a restocking fee to cover our costs. He bitches about it, saying wtf? So I just basically lost 4 dollars? Then I explained to him that we're going to be charged about $2.50 for these transactions, and then he was like just charge me for that. Then I say well, then considering I could have sold this helmet over the weekend, the rest of it goes towards that lost sell. He finally understands. Something a little ridiculous like 10-15% wouldn't be cool, but when your basically covering costs + the inconvenience and hassle of making a sell then having to spend time doing the refund, it isn't ridiculous at all. More ridiculous not to have one, in my opinion.

and chippa, my area is like 80/20 in right to left. That, and we're not a big store. We're decent sized, but about half of a total hockey and way short of big stores. Like 2000 sq. ft... every LHS i've been in is usually 2500-3500 or so. Bigger ones about 5000.

Anyways, we had 75/85/100 in right for getzlaf, and only a 75 left in left. considering we only got 1 75/85/100 for left, im surprised some of them were sold. totally weird curve and not common hand.

I definitely can see the logic in charging a restocking fee on CC purchases.

[raganblink 82]

with cash or checks we don't bother. only when its the plastic that costs us money to run it.

[goblue9280 33]

with cash or checks we don't bother. only when its the plastic that costs us money to run it.

You're being too pessimistic. Studies have shown that people spend more money when using credit cards for purchases rather than cash. I would bet that if you looked at your store records, you would see that the average amount per sale is higher for credit card purchases than for cash/check. With that in mind, I don't think a credit card restocking fee is worth possibly losing a customer over.

[goaliekilr 0]

I would doubt it, do you know how many customers throw a roll of tape, or a pair of laces on their credit card since they never carry cash.

[raganblink 82]

I would doubt it, do you know how many customers throw a roll of tape, or a pair of laces on their credit card since they never carry cash.

Hundreds. Which is why it sucks when people use CCs on anything under 50 bucks. If you have the cash, use it. If everone used cash in here we'd be a lot happier, and it would save us probably 2000 dollars a year. If that happened then we wouldnt charge a fee, because its not hurting us to have it.

Let say you buy a stick for 200, and it will cost you 212 after tax, Then lets say you get home and discover it was the wrong curve or whatever, and need to return it. We don't have the flex or curve or whatever you wanted in stock, so you want a full refund. We will accept it as long as it is still in new shape. So I refund your 212. If this was cash, no big deal. Lets say it was a CC. We'd be charged about 4 bucks for that transaction, which is totally fine if it means we sell the stick, but if you return it, we're going to be charged another 4 bucks. So not only did we not sell something in stock, we lost 8 dollars out of the deal, and didn't have it ready to be sold to someone else. Now tell me that not having a CC refund charge not being acceptable and necessary. If we have about 100 refunds a year averaging around 100 dollars, not having this fee would cost us $400 right out of our pocket. That means we'd have to sell an additional 8-10 top-line OPS to cover that cost, which could have gone to something else.

I get your point on how we might lose a customer over it, but, who the hell is not going to go somewhere else JUST because they charged a fee because i ran a CC and i needed to get a full refund on it? Most places wouldn't bother with a refund at all. Your usually stuck with giving it to someone or ebay or something. I sincerly do not understand why all small business don't charge a refund fee. If you think it is wrong because I accidentally got the wrong thing, then make sure you got what you wanted before you get it.

[chippa13 1844]

Merchandise credit might be the way to go there.

[raganblink 82]

I've offered it before, but I've never had a person want the instore credit, just their money back. However that might be an option worth offering again to people, i just figured since no one wanted it, no one would take it. But I could bring up the prospect that hey, your losing 8 dollars here (or whatever), they'd be more inclined to take the credit.

[TBLfan 25]

The trick... don't offer it.

[raganblink 82]

It would be in are better interest for all returns to go to those store credits though. Either people will forget about them and we made money doing nothing, or once they do come in, they buy more than what their credit had. Honestly now, when you get a gift card from best buy or something for 50 bucks, your either going to put that 50 towards something and end up paying another 150 or something on an item, or you are going to keep coming back to the place and buy CDs, but your then going to be going over the money on the thing, and buy something worth more than that 50 originally. Business practice wise it would be best if all refunds were in form of store credit. More potential for money to be made.

[Chadd 916]

I would doubt it, do you know how many customers throw a roll of tape, or a pair of laces on their credit card since they never carry cash.

I think we had a $10 minimum for credit card sales

[TBLfan 25]

It would be in are better interest for all returns to go to those store credits though. Either people will forget about them and we made money doing nothing, or once they do come in, they buy more than what their credit had. Honestly now, when you get a gift card from best buy or something for 50 bucks, your either going to put that 50 towards something and end up paying another 150 or something on an item, or you are going to keep coming back to the place and buy CDs, but your then going to be going over the money on the thing, and buy something worth more than that 50 originally. Business practice wise it would be best if all refunds were in form of store credit. More potential for money to be made.

In my opinion, there is nothing wrong with in-store credit only returns, particularly for small businesses.

[raganblink 82]

So instead of offering 96% of your money back onto your CC, you think it would be a better policy to give you 100% of your money back in form of store credit? I think that would piss people off more than having the 4% fee.

[TBLfan 25]

I didn't say that people will love it... I don't mind it and I fully understand and am ok with a store credit.

[raganblink 82]

If given the option would you take store credit? If you are an out of towner would that change your opinion? Idk seems like maybe offering both, or just store credit then saying if you want part of a refund we could do that too would be better than sticking with store credit, cuz even if it isn't a full refund, there are a lot of people who would prefer that then get the store credit to a place they dont visit often.

[lerxst 0]

Not to sound like a prick, but that is the cost of sales (returns and cc fees). You need to build that into your model. If you didn't accept credit cards, I bet a dollar to a donut your sales would dip. What percentage of your sales is $100 or more? Nobody carries that kind of cash on them these days, and when I do, use it for parking, fast food, etc. I'd set the CC minimum at $25 at a hockey shop.

[dunner9 0]

Not to sound like a prick, but that is the cost of sales (returns and cc fees). You need to build that into your model. If you didn't accept credit cards, I bet a dollar to a donut your sales would dip. What percentage of your sales is $100 or more? Nobody carries that kind of cash on them these days, and when I do, use it for parking, fast food, etc. I'd set the CC minimum at $25 at a hockey shop.

agreed

[jcp2 2]

I thought that credit card minimums were not allowed by Visa or Mastercard as it would be a violation of the merchant agreement. I'm not sure about American Express.

[Moose 1]

I thought that credit card minimums were not allowed by Visa or Mastercard as it would be a violation of the merchant agreement. I'm not sure about American Express.

Correct.

[VakarLajos 5]

I thought that credit card minimums were not allowed by Visa or Mastercard as it would be a violation of the merchant agreement. I'm not sure about American Express.

I think that American Express allows a minimum as long as your store ONLY accepts American Express. So, basically they do not allow a minimum.

[TBLfan 25]

If given the option would you take store credit? If you are an out of towner would that change your opinion? Idk seems like maybe offering both, or just store credit then saying if you want part of a refund we could do that too would be better than sticking with store credit, cuz even if it isn't a full refund, there are a lot of people who would prefer that then get the store credit to a place they dont visit often.

NO, why would I take a store credit given the option?.. That's why it shouldn't be an option. You either do it or don't.

Edited January 6, 2010 by TBLfan

[Jeff 0]

I own a credit card processing company, so I feel the need to comment here...

raganblink, you should not be charged twice, i.e. for a sale as well as a return. In fact, since it is a return, you should only be charged a transaction/auth fee, not an Interchange/wholesale card fee. Meaning,if your auth and transaction fees total $0.20 per transaction, you would be charged $.20 for the original sale, and then a similar amount on the return.

Do you own the business and check your statements, or are you just assuming that you are being charged a % for the sale as well as the credit? Are you seeing the charge on one statement, and the return on the next statement? The only way I can see this happening is if your processor is doing some shady billing on gross versus net charges.

Also, when it comes to tiny charges, Visa and Mastercard have a special wholesale rate for transactions under $15.00. The wholesale cost is only $0.04 versus the usual $0.10 to $0.15 (plus Interchange fees....) . Meaning if someone buys a roll of tape for $5.00, you should be charged $0.04 plus around $0.10 for trans/auth fees plus the 1-2% Interchange wholesale cost. (Bringing you to a grand total of around $0.20-$0.24 for the $5.00 charge.)

Clear as mud? :) Let me know if you have any questions. It would suck to be charging restocking fees and possibly losing repeat business if you are not being doublecharged. I actually had to explain this to another LHS client of mine who did not really understand it until we broke down every line on the last page of his statement.

Edited January 6, 2010 by Jeff

[lerxst 0]

I own a credit card processing company, so I feel the need to comment here...

raganblink, you should not be charged twice, i.e. for a sale as well as a return. In fact, since it is a return, you should only be charged a transaction/auth fee, not an Interchange/wholesale card fee. Meaning,if your auth and transaction fees total $0.20 per transaction, you would be charged $.20 for the original sale, and then a similar amount on the return.

Do you own the business and check your statements, or are you just assuming that you are being charged a % for the sale as well as the credit? Are you seeing the charge on one statement, and the return on the next statement? The only way I can see this happening is if your processor is doing some shady billing on gross versus net charges.

Also, when it comes to tiny charges, Visa and Mastercard have a special wholesale rate for transactions under $15.00. The wholesale cost is only $0.04 versus the usual $0.10 to $0.15 (plus Interchange fees....) . Meaning if someone buys a roll of tape for $5.00, you should be charged $0.04 plus around $0.10 for trans/auth fees plus the 1-2% Interchange wholesale cost. (Bringing you to a grand total of around $0.20-$0.24 for the $5.00 charge.)

Clear as mud? :) Let me know if you have any questions. It would suck to be charging restocking fees and possibly losing repeat business if you are not being doublecharged. I actually had to explain this to another LHS client of mine who did not really understand it until we broke down every line on the last page of his statement.

Great post!

Can you comment on an earlier post that claims Visa/MC doesn't allow minimums? I still see lots of stores with paper signs saying $x.xx credit card minimum. The cafe in my office building used to have one, now they don't even need a signature for anything under $15!

[Ahriman 1]

I thought that credit card minimums were not allowed by Visa or Mastercard as it would be a violation of the merchant agreement. I'm not sure about American Express.

Correct.

Yeah, but how many people would call up Visa after being "outraged" at a store trying to say there is a minimum charge for cards - and then visa actually investigates and does something about it. I can think of at least 5 restaurants I've had lunch at in the last month that had a "$X minimum charge on credit cards" at the register.

[BenderHockey 127]

I thought that credit card minimums were not allowed by Visa or Mastercard as it would be a violation of the merchant agreement. I'm not sure about American Express.

Correct.

Yeah, but how many people would call up Visa after being "outraged" at a store trying to say there is a minimum charge for cards - and then visa actually investigates and does something about it. I can think of at least 5 restaurants I've had lunch at in the last month that had a "$X minimum charge on credit cards" at the register.

Just because there is a lot of them doing it doesn't make it right. I never carry cash, and there are lots of times I want to grab a bottle of water, or a bagel and need to use the card. I'm not paying for stuff i dont want or need just to make it to $10 or $15.

[VakarLajos 5]

I thought that credit card minimums were not allowed by Visa or Mastercard as it would be a violation of the merchant agreement. I'm not sure about American Express.

Correct.

Yeah, but how many people would call up Visa after being "outraged" at a store trying to say there is a minimum charge for cards - and then visa actually investigates and does something about it. I can think of at least 5 restaurants I've had lunch at in the last month that had a "$X minimum charge on credit cards" at the register.

Just because there is a lot of them doing it doesn't make it right. I never carry cash, and there are lots of times I want to grab a bottle of water, or a bagel and need to use the card. I'm not paying for stuff i dont want or need just to make it to $10 or $15.

"Well, I can either buy this for $5 with a credit card now or not by anything in here ever. And I could call Visa.....so....."