Understanding the implications of refunds on your earnings
At Village, we use Stripe as our payment processor to ensure secure and seamless transactions between providers and families. However, it’s important to understand how Stripe handles fees, especially when refunds are involved.
Stripe fees are non-refundable
Stripe retains its processing fees for all transactions, even when a refund is issued. This means that if you, as a provider, issue a refund to a customer, Stripe will not return the fees charged for the original transaction. This is an industry-standard practice for most payment processors.
Processing of refunds before and after payouts
- Refunds before payout
If you issue a refund before the funds for the corresponding installment are transferred to your bank account, the refund amount including Stripe’s processing fees, are deducted from your next payout. This ensures the family is fully refunded, but it means you absorb the Stripe fees for the original payment transaction. - Refunds after payout
If the refund is issued after you’ve already received the payout for the corresponding installment, Village will initiate a debit to recover the amount to be refunded.
Additional costs for insufficient funds
Keep in mind that refunds after payout may incur additional costs if your Stripe account balance is not enough to cover the refund amount and Stripe is forced to pull the funds from your associated bank account. If the bank account also lacks sufficient funds, this could lead to additional costs, such as overdraft fees.
Best practices to minimize losses
To minimize the impact of refunds on your earnings, it’s essential to consider refund policy alternatives when possible. Offering a credit to the customer instead of a direct refund can be an effective way to maintain customer satisfaction without incurring Stripe’s non-refundable fees.
If you have any questions about Stripe fees, refunds, or managing your account, don’t hesitate to contact our support team. We’re here to guide you every step of the way!
