It's not a penalty, it's just a cost of using the network.
If you use the credit card network not just once but twice -- once to process a purchase and then yet again to refund it -- you're using that infrastructure.
It makes sense you'd pay for its usage. If you drive to work on a toll road and then drive back home along the same toll road, you still have to pay the tolls even though you wound up in the same place at the end.
By that logic they should charge by request volume, not by percentage of amount. As a matter of fact, there is no logic in pricing. Sellers will charge what they can get away with, buyers will pay what they can afford. And of course, it is always negotiable.
That assumes that the cost is proportional to the number of transactions, and is completely uncorrelated to the size of the transaction, which doesn’t make any sense to me. Any costs due to risk will be larger for larger transactions.
In principle, repeated choice of whether or not to use a specific product is a form of negotiation, where each choice provides information to the seller, who can then update their pricing accordingly. In practice, this is an extremely weak signal, is swamped out by market changes, assumes zero cost of switching, ignores network effects, etc. One of many reasons why I distrust economist’s assertion of fairness.
They throw out a number based off my last salary, and said it was non-negotiable. Because I needed a job, I had no option of backing out. The time before that, I tried negotiating, and the hiring director basically said "I know what you made at your last place, so you'll get that."
Even vacation has been non-negotiable. It's disheartening, but typical for tech (and ironically largely enabled by tech).
That sounds like the usual "big businesses get extra considerations that small businesses do not". And since small businesses are the vast majority in number, negotiation is absolutely not something they can rely upon.
Or, to put another way, someone selling handmade goods at a fair using Square will never have more negotiation power than "if you don't like it, leave".
You negotiate by not using square and using an alternative system in that scenario. There are price competitive options even for small businesses. The UI might be clunkier and the equipment more dated but that is the tradeoff.
> In practice, [switching vendors] is an extremely weak signal, is swamped out by market changes, assumes zero cost of switching, ignores network effects, etc. One of many reasons why I distrust economist’s assertion of fairness.
You send them a formal letter to their listed place of business.
You very likely will find amazon is not willing to engage in much negotiation, unless you happen to have a unique offer. But nothing requires amazon to engage.
As a seller? You set up your own website and don’t use Amazon. There are literally thousands of mom and pop sellers that use Shopify and advertise on Facebook and Instagram
Well they actually do both, they charge by volume and percentage.
There is absolutely logic in pricing in terms of setting a pricing floor, which often comes from a combination of fixed and variable costs.
Of course you are right that there is flexibility above that, but again there's absolutely logic there as well in terms of price discrimination mechanisms.
None of this is just arbitrary. These companies put a lot of thought, and logic, into their pricing mechanisms. Get it exactly right and you make a lot of money, get it a little bit wrong and you go out of business.
> If you drive to work on a toll road and then drive back home along the same toll road, you still have to pay the tolls even though you wound up in the same place at the end.
Funny you should use that example. On toll roads you get charged in both directions, but I've never seen a toll bridge that had tolls in both directions. Usually the argument is that you really can't go any other way so the toll in one direction covers the cost of both trips.
But I actually think you're right here -- most people won't make the "return trip" so it makes sense to only charge people twice that do.
I've never seen a toll bridge that doesn't have tolls in both directions. I didn't even know that charging in only one direction was a thing. You live and you learn.
Fairly standard around Chicago area. Results for Illinois Tollway Plaza will show them (not all of them are - they can get interesting at intersections and off-ramps).
(late edit)
This is largely driven by the question "is a vehicle heading in one direction likely to return in the other?"
For trips from Oakland to SF, yes - it is very likely that the vehicle will go back across the bay bridge back to Oakland (rather than heading down to San Jose and then back up the other side).
On the other hand, a vehicle driving on the tollway through Chicago may be heading up to Minneapolis or to Detroit and then to other directions. Trips on the Illinois tollways are less likely to have a return trip and so both directions need to be tolled to capture the vehicles. It costs twice as much to do this (twice as many toll booths and staff) and so given the choice (trips to an island or other geographically isolated area) they only pay tolls in one direction.
Also tolls crossing into NYC. Since going around is impractical, it means you need half as much tolling. And since the land for tollbooths would be more expensive on the NYC side your savings are even larger.
Interesting! It may be a geographical thing. Clearly they don't want you to be able to do a free "circular commute" so for instance, in the Bay Area, all bridges charge toward San Francisco, and are free in the opposite direction. So there's no way to do a circular commute that wouldn't add 100+ miles by circumnavigating the Bay every day. But it seems like it "should" be simple enough (Dangerous words!) to coordinate say, "all bridges over a river in the metro area charge eastbound."
It seems kind of a waste from my perspective to have to do the traffic bottleneck in two directions.
An example: to use the ferry system here in Washington’s Puget Sound, you pay to go to the island, but the return trip is free. Same applies for bridges taking you to islands.
> I've never seen a toll bridge that had tolls in both directions.
Huh, I think I've only seen this once (the Tacoma Narrows Bridge). Other toll bridges I've driven have all had tolls in each direction, e.g., Ambassador and Blue Water Bridges to Canada, Lake Washington floating bridge. Maybe I need to start taking more bridges to nowhere!
The floating bridge has a toll in both directions because there’s an alternate route which isn’t too much worse when there’s no traffic (and something about federal highway grant money)
Interesting! I'll admit my sample size is limited to bridges in California, but at least in the Bay Area all the bridges only have tolls in one direction.
I suspect the Bay Area model is more common where the dominant traffic on a bridge is two-way commute traffic that can’t easily escape the toll regime for one side of the commute. In that case, one-way tolls reduce infrastructure and operating costs, and traffic impacts, of toll collection without any significant downside.
The other half of that is a practical matter -- collecting tolls in both directions means constructing and staffing a larger and more complex toll plaza. It's hard to justify that expense unless a lot of tolls will go uncollected without it.
> The other half of that is a practical matter -- collecting tolls in both directions means constructing and staffing a larger and more complex toll plaza
That’s part of what I waa getting at with “infrastructure cost”, yes.
That makes sense. It fits with the Tacoma Narrows Bridge, which connects Tacoma (urban economic hub) to the Olympic Peninsula (some small towns, mostly wilderness).
It costs Square money (card network costs) to refund a transaction. It's not a penalty, it's just costs associated with moving money. Even if the money is moving the other way, there's still a cost.
Definitely "The way it is" -- but it does seem greedy. All systems drift toward the greediest possible implementation, though, in the absence of competition or regulation mandating otherwise, of which we have neither.
Apparently merchants can avoid it with store credit:
> Additionally, we offer a number of resources and tools to assist sellers in accommodating this change. Our Return Policy Guide & Templates provide sellers with guidance on how to create a return policy that best suits their business, while Square’s free eGift Cards can serve as an option for providing store credit to buyers with no additional processing fees.
A refund _is_ a chargeback – the only difference is who initiates it. Technically, any time funds are moved onto a card, it's called a chargeback. This is how one would load a gift card, for instance.
When it comes to credit card merchants, a chargeback always dings a transaction fee, and the merchant may additionally tack on a chargeback fee. So a full refund process will incur two transaction fees, plus possibly a chargeback fee.
>Technically, any time funds are moved onto a card, it's called a chargeback.
I've seen more companies offering a reverse debit now (not sure of the actual term). Is this not through a different mechanism? Funds are available instantly same as how they're drawn via debit vs credit.
