We’re no stranger to fees. In informal Nigerian communication, they are sometimes called “debits” or “bills”. Sure, now you relate.
A fee is the money you pay for a service. This is slightly different from the money you pay for a product. That one is known as “price”.
If you find it confusing, this example will clear things up. Imagine that you walk into an electronic store. You’re going to purchase a brand-new television.
You pay the price for the television and automatically, it becomes yours. But it’s too large for you to carry alone. So you pay a fee to get the TV delivered to your home.
The price makes a transfer of ownership happen. Alternatively, the fee makes a process or task happen. That’s how it really works.
Having said that, let’s move forward. The following sections will discuss fees, how they are calculated, and lots more.
What are Fees?
Fees are the charges collected for carrying out a transaction.
We mentioned that fees precede a process or task. That is absolutely true. In the context above, carrying out a transaction is the task.
The fee, therefore, serves to incentivize the platform handling this transaction.
How Fees Are Determined
Multiple factors:
Different platforms, companies, or services charge varying fees. It all boils down to what factors are important in the fee determination process.
For a payment processing company, fees may be determined by transfer amount, time and day of transfer, and network status.
Higher transfer amounts usually incur higher fees. The same goes for transfers made in the evenings or on weekends. Similarly, you can expect higher fees when there’s network congestion.
Fixed or Percentage-based:
Some companies don’t rely on factors when setting a fee. Instead, they use a fixed or percentage-based system.
When fixed, fees remain the same no matter the transfer amount or surrounding conditions. An example is a fee of $1 for all types of transactions. In this case, a user will pay $1 for a transfer of $100. Another user will pay the same fee for a larger transfer of $1000.
A second scenario makes use of a percentage.
For instance, a bank or finance company may charge 10% on transactions. This means that senders will pay $1 for a transfer of $10. The transfer recipient gets $9 at the end of the day. Similarly, a transfer of $100 attracts a charge of $10. The recipient in this case receives $90.
Having a fixed or percentage-based fee makes things very simple. Users can easily calculate what charges they incur for using a service. On the other hand, factor-based fees can be challenging for users.
Fees and Refunds
Talking about fees naturally introduces the topic of refunds. So what are refunds?
Refunds are payments and associated fees sent back to a customer/user. It is important to read the refund policy before using any service.
Neglecting this could put you in trouble, especially regarding compensation for a poor or incomplete service. If you agree to the terms and conditions of a service which does not offer refunds, you cannot legally ask for one if need be.
There are several reasons why services or companies issue a refund. At the same time, refunds can be full or partial.
Let’s discuss what could trigger a refund.
1. Poor or bad service delivery
This refers to service delivered in a manner that is unprofessional or unsatisfactory. Many times, poor service stems from the behavior of the service personnel towards the customer. An instance is when a customer support agent begins to sound rude or impatient.
Poor service could also result from extended service delivery time. For instance, when a transaction that should be processed in two working days takes longer.
In both cases above, a service company might issue partial refund to affected customers.
2. Incomplete or unfulfilled service:
Imagine ordering a waybill and your package gets missing or broken on delivery. A missing package means nothing is delivered to you eventually. This is an unfulfilled service.
A package delivered in a bad shape is another problem. However, the delivery service is fulfilled but not complete, since packages are to be handled with great care.
Customers will likely get a complete refund on waybill fees - if their package gets missing. In addition, the service company will pay for the package in question.
For broken packages, refund amounts depend on the extent of the damage. Customers may be looking at the a small refund for a minor scratch on the product. Bigger problems such as dents or complete damage to one or more features necessitates a more serious form of settlement.
Service companies sometimes offer to take possession of broken packages in exchange for new ones. Here, the company initiates a new waybill.
Fees Manipulation or Gouging
Service companies or platforms are susceptible to fee manipulation. This is also known as fee gouging. It is the fraudulent act of increasing fees or charges to customers.
Many companies offer competitive fees to their customers. Some stand by the fee they declare. But some others try to make extra profit. They do so by adjusting their fees moments before a customer places an order.
Imagine that a customer gets on a money transfer app. They see a fixed fee of $1 and agree to proceed. After inputting the recipient’s details, they get a confirmation page.
This page lets them check that all details are correct. It also serves to remind the customer of the fee they have to pay and other information such as the day or time of arrival of the funds.
On the confirmation page, a new fee of $1.3 is displayed (instead of $1). This new fee appears at the bottom of the page. What more? It is written in small fine prints, making it easy to miss.
The customer doesn’t take note of the fee adjustment and proceeds to pay.
How to Ensure Fee Transparency When Using a Service
Fee transparency is a situation where a service does not practice fee manipulation. In other words, services that do not practice fee manipulation are transparent. Such services have transparent fees too.
As a customer, you cannot determine the integrity of a service. However, you can take steps to avoid being a victim of fee gouging. Here are some of the things you can do:
Read Refund Policy
Read Terms and Conditions
Read customer reviews on fees and refunds
Confirm the fee amount immediately before ordering the service
Report fee adjustment to customer support or relevant authority.
Leave a review to help others understand the fees and refund situation.
Conclusion
Fees are a part of service and business activities. But they don’t have to be a burden. We mean that both in terms of value (fee amount) and consistency (whether the fee amount is steady or rapidly fluctuating).
The takeaway from this article will help ensure that. You’re now better positioned to understand how you’re charged and protect yourself from fee manipulation.
