vgcea Posted 23 Aug 2012 , 5:50am
post #1 of

Hi everyone, in light of recent threads about customer complaints, requests for refunds, canceling payments e.t.c.

I'd like us to have a thread as a reference point (not a place for legal advice) just for guidelines on how to handle these issues, from prevention (contract clauses) to damage control.

For example:

I understand that Square does not permit refunds so if a customer is to get a refund, the merchant must run 2 transactions: one to charge the new (discounted) amount and the second to refund the client's first (full) payment. I read somewhere that it's better to run the new amount first before processing a refund. Not sure why.

23 replies
costumeczar Posted 25 Aug 2012 , 1:50am
post #2 of
Quote:
Originally Posted by vgcea

Hi everyone, in light of recent threads about customer complaints, requests for refunds, canceling payments e.t.c.

I'd like us to have a thread as a reference point (not a place for legal advice) just for guidelines on how to handle these issues, from prevention (contract clauses) to damage control.

For example:

I understand that Square does not permit refunds so if a customer is to get a refund, the merchant must run 2 transactions: one to charge the new (discounted) amount and the second to refund the client's first (full) payment. I read somewhere that it's better to run the new amount first before processing a refund. Not sure why.




I wrote that. It's because if you're processing a refund from square and have to do the entire original amount (they can't process partial redunds yet) you'll have to have your client's card to do it. If you process the full refund for a disgruntled client, then say " i need your card to charge you again," do you really think they'll hand it over? Do the new charge first,t hen issue the refund for the original amount. That way you'll at least be sure of getting them to sign off on the new charge. Especially if they're as shifty as some of the people who have been trying to rip people off lately.

jason_kraft Posted 25 Aug 2012 , 2:30am
post #3 of

My advice is to accept cash and checks only if you can, and give checks enough time to clear. Credit cards are great for consumers (I use mine just about every day) but not so advantageous for merchants.

When I get a complaint from a customer, I give them a refund after talking to them and confirming that it's a valid complaint. This happened to us once in 4 years of business and 700+ orders: a customer called and complained the cake they had was dry and they didn't eat it. It was a gluten/egg/dairy/soy/nut-free cake and they probably didn't follow the directions for when to take it out of the fridge (the directions were given verbally and printed on the invoice) but I gave them a full refund anyway, since if they weren't satisfied they shouldn't have to pay.

They may have been trying to get free cake, but I find it's best to give the customer the benefit of the doubt. This is easy when the customer is friendly, but IMO the true test of superior customer service is treating rude and disrespectful people with courtesy and respect, even if they don't deserve it. If you post on CC regularly you will get plenty of opportunities to practice this skill. icon_wink.gif

vgcea Posted 26 Aug 2012 , 5:09am
post #4 of

Thank you costumeczar and Jason_kraft. You're both invaluable to CC with all the advice and tips you give.

@Costumeczar: I can see the logic in running the new transaction first. I'd hate to have to chase a customer down to get their card.

@Jason-kraft: While I love the convenience of being able to accept credit cards, I found myself thinking about the processing fees today. The way I currently have it set up, when a client uses their card the fees cut into my profit. It's no big deal for small orders less than $100 but 3% of the larger orders does add up. I suppose that's the price of convenience?

jason_kraft Posted 26 Aug 2012 , 5:25am
post #5 of
Quote:
Originally Posted by vgcea

@Jason-kraft: While I love the convenience of being able to accept credit cards, I found myself thinking about the processing fees today. The way I currently have it set up, when a client uses their card the fees cut into my profit. It's no big deal for small orders less than $100 but 3% of the larger orders does add up. I suppose that's the price of convenience?



It really does add up if you look at it at the macro level. At a rate of 3%, you are basically working for a week and a half every year just to pay those credit card fees.

I agree that accepting credit cards is more convenient than cash or checks. This might be worthwhile if you have to drive 30 miles to get to your bank, but I spent maybe 5 minutes a week depositing checks and cash at our credit union (it was next to a grocery store so I would combine trips). Over the course of a year that's about 4 hours, so if you have $35K in annual revenue and are paying $1000 in credit card fees, you are paying $250/hour for this convenience.

costumeczar Posted 26 Aug 2012 , 11:18am
post #6 of

I think that the issue of accepting credit cards is more of convenience for the client, not for us. People are so used to paying with a card today for everything they don't even carry checks or cash.

leah_s Posted 26 Aug 2012 , 12:06pm
post #7 of

I just add the cc fee to their bill. Concert ticket services do it with every transaction. Why should I pay for their convenience?

Cakepro Posted 26 Aug 2012 , 4:34pm
post #8 of
Quote:
Originally Posted by leah_s

I just add the cc fee to their bill. Concert ticket services do it with every transaction. Why should I pay for their convenience?




You should probably read the credit cards' TOS.

You can offer a cash discount but you can't charge a credit card or "convenience" fee.

http://www.creditcards.com/credit-card-news/merchants-who-violate-credit-card-terms-1275.php

vgcea Posted 27 Aug 2012 , 7:09am
post #9 of

I've had some places (e.g. Secretary of State's office when I filed the paperwork for my business) include a processing fee if I used a credit card to pay. I wonder how they get away with it.

costumeczar Posted 27 Aug 2012 , 11:46am
Quote:
Originally Posted by vgcea

I've had some places (e.g. Secretary of State's office when I filed the paperwork for my business) include a processing fee if I used a credit card to pay. I wonder how they get away with it.




That's a processing fee that's separate. I don't think you can just add the fee to the amount due without calling it something else. Ticketmaster calls it the convenience fee, which always makes me curse them when I get the bill.

jason_kraft Posted 27 Aug 2012 , 3:08pm
Quote:
Originally Posted by vgcea

I've had some places (e.g. Secretary of State's office when I filed the paperwork for my business) include a processing fee if I used a credit card to pay. I wonder how they get away with it.



I believe there are some exceptions to this rule, including government agencies and utility companies.

The Ticketmaster "convenience fee" is added to all transactions, not just credit card transactions. The convenience fee can sometimes be avoided if you are willing to drive down to the venue and buy tickets from the box office in person.

vgcea Posted 27 Aug 2012 , 9:55pm

Thanks to both of you for clearing this up for me.

FromScratchSF Posted 27 Aug 2012 , 11:01pm

I'm in the opposite camp - I prefer credit cards. I use Google Wallet (and yes, it's called "Google Wallet". Google Merchant is the back end of Google Wallet). It has 100% merchant protection. I add a transaction fee to every order - it is pre-calculated into my per-serving charge or I add it as a convenience fee. Many, many companies do either way.

No, I'm not in violation of any TOS - because I charge it on every transaction weather they pay cash, check or credit card. Who are they to tell me what the "convenience fee" covers?

Google Wallet has an excellent payment guarantee. I can reverse charges, refund small amounts, and generate invoices sent to a customer to be paid no problem. Paypal and Square do not offer anything like this (I don't think):

http://support.google.com/checkout/sell/bin/answer.py?hl=en&answer=42863

2 business days after the payment happens the money is deposited into my account automatically.

I do have a Square, I have used it a few times. I even know some people on the Square team. Unless they can offer protection like Google (which they never will - they don't have the assets), I will only use them as back-up processing.

Paypal sucks and is the WORST for taking your money, freezing your account etc. I don't have a Paypal account. I can't stress enough to people to stop using Paypal - they are NOT on your side!

So yeah, GO GOOGLE!

costumeczar Posted 27 Aug 2012 , 11:22pm

But google has this in their terms of what's covered as far as chargebacks:
The resulting chargeback must be for a claim for unauthorized purchase or non-receipt of items. Chargebacks for claims of defective merchandise or items not as described, failure to post credit for cancelled or returned orders, or duplicate billing arent covered.


So if someone said the cake was "defective" then you're back in the same boat. I'll take your word that google wallet is better than the others, but I have a feeling that it isn't totally foolproof. I doubt anything is other than cash...

Does google wallet let you swipe a card with a scanner, or do you have to type it in or send an invoice? For me the convenience is the ability to have someone pay a deposit right there without me letting them go home and "think about it" is they want to hire me right then. If I'd have to send them an invoice at a later time that kind of kills that.

FromScratchSF Posted 28 Aug 2012 , 12:08am

Hurm - I will re-read but I am fairly sure as long as you have a refund policy on your website including what your remedy is for dissatisfaction and the customer agrees to it at the purchase, plus they sign for the cake in person - then its covered. I have a refund policy on my website and I have text I include on every Wallet payment request that says: "NOTE: The completion of this payment request is your acceptance of Beyond Buttercream's cancellation, refund and chargeback policy located at http...."

I've only had one chargeback and because I had language on the payment request, a link to my cancellation and refund policy on my website and a signed invoice for when they picked up the cake, the chargeback was canceled in my favor very very fast..

Not saying it's 100% ironclad, but I researched this a lot when I first started on what was the best way I could avoid any issues accepting credit cards.

They don't have a card reader like Square, but they do have this: http://www.empsebiz.com/googlewallet/index.html

Of course only helps if you already have POS readers.

So, you have to log into your merchant account then generate an invoice via email that gets sent to the customer. I can do it pretty easy from my iphone.

costumeczar Posted 28 Aug 2012 , 2:04am

I would never be able to get the client signature on delivery, since i pretty much do only wedding cakes and the bride is never around when I deliver...

I don't have a smartphone either, so i don't know if this would work for me. icon_sad.gif My phone is a dumphone.

jason_kraft Posted 28 Aug 2012 , 2:40am

Another option with Google Checkout is to integrate it into your web site so customers can pay online with their credit card.
https://support.google.com/checkout/sell/bin/answer.py?hl=en&answer=38882&topic=2450413&ctx=topic

Adding "Buy Now" buttons to your web site is pretty simple, but for custom orders you may need to have your web developer make some modifications to the checkout code, as in the link below:
https://developers.google.com/checkout/articles/Allowing_Buyers_To_Specify_Price_Product_Name_Description_Quantity

Once you have a Google Checkout button integrated into your web site you could have them pay the deposit immediately by navigating to your site on their phone.

vgcea Posted 28 Aug 2012 , 4:05am

Thanks FromScratchSF for bringing up Google Wallet. The last time I tried to read-up about it, all I got was information for customers wishing to use Google Wallet rather than merchants wishing to accept Google wallet.

So if I understand the info in that link you sent, the card reader is one that the credit card gets tapped on (rather than sliding the card). This reader is plugged into your phone like the Square card reader?

FromScratchSF Posted 28 Aug 2012 , 5:27am

No, the tap reader for GW plugs into a point of sale machine, like you'd have at a grocery store or gas station - something that goes with a cash register. So, not helpful to (most) any of us. I wanted to post the link because *ahem* someone would have pointed out that it exists if I said there was no POS available. I don;t know if y'all have seen them - they are popping up all over the bay area. You know, home of Google icon_biggrin.gif

There are several free or low-cost POS services out there, Square jjust happens to be taking the world by storm because the reader is free, the transaction fees are pretty low and they don't require you to have a merchant account.

I think the biggest point that we need to understand is there are 2 different ways to process credit cards - the first, banks like Wells Fargo. My understanding is they that do POS processing and require you to have and maintain a full merchant account with them to be able to process payments. You rent a POS machine from a leasing company and pay a service to open the secure portal between your store and your bank, but your bank does the actual card processing and the sale is deposited straight into your FDIC insured bank account - no 3rd party. This is the best option for business because if a customer complains and wants their money back, unless they claim fraud there is no refund that the bank forces. But this is very expensive and unless you are a large company, not worth the cost to do business. Not to mention how hard it is to fit a cash register in your purse icon_biggrin.gif

The 2nd option, what most of us use, are 3rd party private companies that offer low-cost credit card card processing. Paypal, Google and Square (to name a few). They not only do the POS, they do the processing as well. Then deposit the money into your bank account. They make up their own rules about how to deal with customers and merchants because they can. I love Google today, but at any time they can change their terms of service and be more like Paypal. That would be a tragedy! I do hope they jump into the dongle game, that would make life SUPER handy for me!

jason_kraft Posted 28 Aug 2012 , 5:38am

So if your only option to accept credit cards in person is Google Wallet, and the customer does not have the Google Wallet app on a compatible phone or a paypass-enabled Citi Mastercard, does that mean they can only pay by cash or check?

VanillaSky Posted 28 Aug 2012 , 10:03am

In response to an earlier post about passing on card fees to customers, you can now do so. There was a huge settlement last month with the card companies and most merchants, and the payment card networks agreed to this change. Prior to the settlement, it was a seldom enforced rule, especially for smaller merchants. Visa and MC simply did not have the bandwidth to enforce it.

Also, my understanding is that for GW to be accepted at the POS, the merchant must accept pay pass already, which means the merchant is already set up to accept card payments. GW is not like Square for merchants, it is not a workaround to signing up directly to accept card payments, it just allows merchants to accept mobile payments in addition to plastic. Its target merchant base are high volume merchants like Starbucks or fast food stores where speedy checkouts mean more sales. it does not make sense for most cake businesses that I read about on this site to invest in it, at least not right now. I'd wait to see if it gets adopted by the larger merchants first.

From the cardholders perspective, GW appeals to them because they can upload all of their plastic credit and debit cards onto their mobile phone. I believe due to exclusivity arrangements with Google's launch partners and the need to get arrangements in place with other issuers, GW launched with Citi MC and a preloaded prepaid card, but I believe users could add their other cards.

costumeczar Posted 28 Aug 2012 , 11:34am

So yesterday i got a call from a Step-MOB who had booked the previous day with me. Due to a blowup between the bride and her father at dinner that nght he had decided to pull all funding from her wedding until further notice, so they wanted to cancel the cake. Since it was only one day and it was for next June that was no big deal, but this thread reminded me to run the charge for the tasting and fees before the refund, hahaha!

DDiva Posted 28 Aug 2012 , 12:57pm

Interesting thread....
FromScratch: my experience with Google Wallet was awful, I mean awful!! It took over a month to get payments deposited to my checking account. And no, I did nothing wrong; filled out nothing wrong. They did. They set up my account wrong. I was trying to replace using PayPal (which I only use for invoicing) and it was a nightmare. I also don't like not being able to actually talk to a human being. There are no phone numbers for Google Wallet or Google Merchant operations. I've used PayPal for almost 15 years with no problem. None. Zero. Just thought it would be cool to have payments go directly into the business checking account, so I tried Google Wallet.

I have a storefront so I invested in Intuit POS (Quickbooks). However, there is an additional charge for invoicing and I was not willing to pay it; which is why I still invoice through PayPal.

CostumeCzar: I get signatures for all deliveries, including wedding cakes. On my contract there is a place for the name of the person who will accept delivery of the cake. Sometimes it is the bride or member of her family; the wedding planner, the venue event manager, etc. But someone signs for the delivery. I've been doing this for over 15 years with no problem. The person is not addressing cake design, etc. just that the cake was delivered and set up and was standing when they saw it (lol)--and I take pictures to prove it.

Our experiences are all different. I think this was an excellent thread idea. Wow...and so far, no fighting!!

costumeczar Posted 28 Aug 2012 , 3:04pm

Ddiva, I wouldnt be able to get signatures for everything here...I wish I could but people either don't want to sign or there's nobody there. I have delived SO MANY cakes to places where there is literally NOBODY there, it's ridiculous. Or the only people there are temp serving staff, that kind of thing. If I do get the person in cahrge they dont want to sign for anything that they didnt order...I just put in my contract that I take photos as proof of delivery, but that wouldn't be enough for some of these services.

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