If you’ve ever had sticker shock after reviewing your payment processor statement, you’re not alone. Credit card fees are a necessary part of doing business today—but that doesn’t mean they should take you by surprise.
Here’s what every vendor should know about navigating credit card fees and refund policies like a pro.
Understanding Credit Card Fees
Every time you swipe, tap, or take a payment online, your processor takes a small percentage. For most vendors using Square, Stripe, or PayPal, fees usually hover around 2.6% to 3.5% + 10¢ to 30¢ per transaction.
Example:
You sell an item for $25.
The fee (let’s say 2.9% + 30¢) = $1.03.
You net $23.97.
Tip: Don’t forget to factor those fees into your pricing!
Best Practices to Handle Credit Card Fees
- Build Fees Into Your Pricing:
If your average fee is about 3%, add that margin into your retail price instead of absorbing it. - Set a Minimum for Card Use:
If you’re selling low-priced items (under $5), consider setting a minimum purchase for using cards (check your processor’s terms first). - Use Transparent Signage:
Let customers know your payment methods and refund policy upfront to avoid confusion. - Batch Process Refunds Wisely:
Avoid frequent one-off refunds. Instead, double-check purchases before charging cards—especially at markets where purchases are quick and spontaneous.
Refunds & Processing Fees: What Vendors Need to Know
Here’s the hard truth: most processors do not refund transaction fees when you issue a refund.
- Square, Stripe, PayPal, and others keep the processing fees—even if the customer is refunded in full.
- This means you’re losing money twice: once when you make the sale and again when you return the money.
What You Can Do:
- Offer exchanges or store credit first instead of a full refund.
- State clearly that transaction fees are not refunded with returned purchases.
- Example policy:
“Returns accepted within 7 days for store credit only. Refunds to the original payment method will be minus processing fees.”
Final Thoughts
You work hard for every sale—don’t let fees and unclear refund practices chip away at your bottom line. With a few clear policies and proactive communication, you can protect your business and still offer great customer service.
Cynthia Freese (She, Her, Hers)
The Friendly Godmother of Made in Iowa
319 775 0458 MarionSun.com
Join us at an upcoming market
October 18, – Made In Iowa Fall – Cedar Rapids
November 29 & 30 – Made In Iowa Holiday Market– Cedar Rapids
December 20 & 21 – Made in Iowa Merry Market – Cedar Rapids
