<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by cordelli:
Either then you are very lucky or we are very unlucky, we certainly pay a fee in both directions in the very few instances we process a credit. Seems like we need to revisit that with our bank.</font>
I think you may be unlucky. When I was a Visa/MC merchant, things worked just as ozstamps describes - the discount rate worked the opposite way for returns such that the merchant effectively got the discount rate refunded to them at the same time the customer got the original credit refunded to their account.
In my case, I had a $0.20/transaction processing fee in addition to the discount rate. This amount was charged for every transaction, whether it be a purchase, credit, authorization only, or even a declined authorization. So, in my case, any purchased followed by a refund would cost me $0.40, but no discount fees (I would imagine that with the plummeting telecom costs, many of these per-transaction fees have been reduced or eliminated compared to 10 years ago).