Consumers Buying in the U.S. Can Lose 8-10% on Adjustments
Transaction adjustments don’t work in Canadian customers’ favour. With shipping issues, there can be a loss of up to 36% or more.
It doesn’t matter how friendly and willing customer service staff are when there’s a problem, nor does it matter if they remember to credit you any flat-rate shipping charge you paid. The fact remains that if a Canadian consumer is having their credit card credited as opposed to receiving a credit note from the store, they are taking a hit of anywhere from 8-10%, even if they respond just a few days after they were first charged.
The reason is simply, buying U.S. money on your credit card has an entirely different rate than selling U.S. money, which is essentially what happens when you’re getting a correction applied to your VISA or MasterCard. That’s how the foreign exchange market works, and the differences are far greater than the 2.5% the bank is charging for the transaction itself.
Here’s an example:
Last month “Joe” bought some merchandise from Christian Book Distributors. (CBD) Something was damaged or missing, so he called their customer service people, who quickly agreed to credit his account.
Right there, something is wrong. CBD charges Canadians a flat rate shipping charge of 25% (or 20% if the order is over $200). Did Joe get his shipping charge back? He’s not sure, so he checks online. No luck. CBD only posts order history, not accounting history; and unlike those of us in the business who are accustomed to getting actual printed credit notes for bookkeeping purposes, the company issues no paper copies of credits. His credit is in Canadian dollars and the more he stares at it, the less he can remember about what happened that day.
Beyond that, Joe bought the books that day at an exchange rate of 1.3490 but he was only getting credited at a rate of 1.2636 a difference of 8.5%, because of the aforementioned difference in rates depending if you’re buying or selling. If the dollar had been more active in this period, he would lose more. We figured that rapidly calling in the shortage or damage could still result in a difference of closer to 10%, perhaps even 11.5% on some days the dollar has been more volatile.
So Joe knows he’s out 8.5%, but he’s not sure about the 25%. That might be a combined hit of 35.6% when you multiply the two factors together. Really, Joe should insist that CBD issue a credit note that he can apply on a future purchase (assuming he’s not one of the many who never remember to use their electronic credits.) But the CBD customer service is so very friendly, and talking so fast, that the subject of shipping and variable exchange rates never comes up.
On a $20 (US) Bible that didn’t ship or came defective, he’s now out $7.12 CDN, but he thinks that his account was credited to his satisfaction, because he doesn’t read his credit card statement closely, and he especially doesn’t examine the exchange rates on transactions. On a $40 Bible, the amount could be closer to $15.
Buy from a local Christian bookstore and you just don’t have these issues. More Canadians need to be made aware of the potential for things to awry, even when friendly staff south of the border seem to be quickly cooperating with requests for adjustments.