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Square may refund everything since they typically charge more up front. But a typical merchant provider usually has different rules.
Yes. If it's a same-day void, merchant doesn't get charged.
But if it's next-day or later (ie, the transaction has already posted), the processing company charges the merchant again on the refund
So it goes like this:
Day 1: can I pay by credit card?
Sure, we lose 3% but it's a cost of doing business.
Day2: oh damn, my wife yelled at me for using the wrong credit card. Can you refund it, and I'll use a different card?
Sure, we'll lose 3% on the refund, and lose another 3% running it on the 2nd card.
So we've lost 9% total --> just to accomodate you and your wife.
We run a small business.. yes, this happens. It is stupid and painful but we smile and chalk it up to 'customer service'.
Recent real-life example:
Can I put down a $1400 deposit? Sure. (lose 3% = $42)
(Few days later..)
Hey, know what? I changed my mind. I need my deposit back. (Process refund.. lose 'nother $42).
So we've lost $84 to someone who is not even going to be doing business with us.
For larger transactions, we are considering refunding by check rather than c'card.
Charging back to the customer would be nice, but a great way to lose the customer :(
Last point: c'card processing fees aren't 2%, for smaller merchants. If you know where I can get flat 2%, please post it here.