Did you know that Steam handles 60,000 refund requests per day? That’s a whopping 10,000 more daily refunds than they handled back in May 2017. Some days, the spike goes up to 100,000 or more, but 9-12% might not be addressed immediately.
And despite this, the digital marketplace giant has an average response time of 48.75 minutes to 1.45 hours. Yes, that means even on the worst of refund days, Steam gets things handled in about two hours or less.
But just how does Steam handle refunds? And how about other payment issues—or VAT protection, for that matter? Developers who opt to self-publish should know what sort of standard they’ll need to adhere to in order to provide satisfactory customer service.
Let’s consider how Steam handles customer service and what you can do to follow suit, even if you’re a solo developer.
You can request a refund for nearly any purchase on Steam. This includes a PC that doesn’t meet hardware requirements for the game or just not liking the game after playing for an hour. The only catch is that the request should be made within 14 days of purchase and the game must be played for fewer than two hours. If a player waits until after that deadline, or doesn’t meet either of these requirements, they can still ask for a refund, as Steam will simply look over the details of the inquiry before deciding (but they are generally pretty lenient).
Once the ticket has been submitted, players receive their refund, in full, in about a week. The refund is sent in the form of Steam Wallet funds or through the same payment method used to make a purchase, like a card. If there’s an issue with your card, like you lost it, or it got stolen, they simply refund the Steam Wallet.
Now, even though Steam is lenient and generally refunds most purchases, let’s consider how the refund policy stacks up in specific situations:
Logically, much like Steam, you can set regulations in place. For instance, maybe you want to allow customers to return a game for any reason, as long as it’s within a 14-day window. Make sure that is known on your website, like on an FAQ page clearly labeled under Returns. The same applies for any other return, chargeback, and VAT solution you decide on. And if you’re out of ideas, consider looking at what Steam has done, use it for inspiration.
More so, try to be reasonable about what you allow. Steam lets people return games even outside of that 14-30 day grace period. Will you do the same? Will there be exceptions to this rule? More importantly, how will this affect your business in the long term? Businesses must cater to the customers, but they can’t lose money in the process.
Unfortunately, the cost of running a business is high. Not only is there a cost for work supplies (software, PC, taxes, etc.), but there is also a cost of shrinkage. Every business, large and small, should always account for some level of shrinkage. This can be entered as an expense, since you can receive a tax deduction for your loss at the end of the year. This includes damages or fraud. Two of the most common types of payment issues these days are return fraud and chargebacks.
Return fraud involves illegally obtaining a game or game related product, like DLC or a collectible, and then getting a refund, which in turn costs the developers money. Products do not always have to be illegally obtained, however, since items ineligible for refund can also be used in these frauds.
Chargebacks commonly occur when purchases are made with stolen credit cards. Once the rightful owner of a credit card realizes the issue, they will contact their bank and explain the situation, which will result in a new card, if not an entirely new account—and what is hopefully an increase in protection.
The way these two types of payment issues are handled varies by company. In the case of Steam, returns are generally just fine for them to handle, since most refunds result in Steam Wallet funds. This means that the developers get absolutely nothing, but Steam itself gets to make money off of another sale anyway, since the player will turn right around and purchase another game with the Wallet funds.
More so, if a player keeps getting returns and it starts to seem like abuse, Steam will permanently ban you for fraudulent credit card use. The same rule applies for continuous chargebacks.
As we’ve covered before in a previous article, too many returns and chargebacks and the developers are subject to monitoring by the Visa Monitoring Program. The reason being that Visa’s brand is threatened when there are excessive chargeback levels. They like to monitor merchants and take action whenever things are looking suspicious. Your objective here is to limit payment issues, and keep your profits.
To do that, it’s important that you set up some type of fraud protection, such as requiring a receipt for cash returns, only refunding in the same form of currency used during payment, and offering store credit to limit cash refunds. Setting up a 30-day window for returns is acceptable, as is providing gift receipts to increase customer satisfaction. Finally, offer exchanges whenever possible, or require identity verification.
Four things to avoid are faulty store policies, defective merchandise terms, soft descriptor errors, and not matching chargebacks to sales transactions.
“If your use of Steam is subject to any type of use or sales tax, then Valve may also charge you for those taxes, in addition to the Subscription or other fees published in the Rules of Use. The European Union VAT (“VAT”) tax amounts collected by Valve reflect VAT due on the value of any Content and Services, Hardware or Subscription.”
VAT, or Value Added Tax, is a consumption tax on consumer spending. Whenever international players make an online order for a Valve product there may be VAT charges included in the purchase. When returns get processed, Valve is known to absorb the cost and pay the VAT itself, just for the sake of keeping things simple.
Valve reports these VAT declarations each quarter of a year to HM Revenue & Customs in the U.K. who then distributes to the various EU member countries it applies to.
If you’re primarily selling your games in digital form, you might be surprised to know that rules about worldwide taxation change consistently for digital goods. For instance, for the EU alone, digital businesses who sell their goods in Europe must apply, collect, and remit VAT (Value Added Tax, a consumption tax on consumer spending) against all customer invoices. If you sell to VAT-registered businesses, they are exempt under a reverse-charge scheme, but you are required to have their VAT registration details.
The best way to approach this issue, regardless of which country you’re selling your game in, is to clearly state this at checkout (price of $20 + sales taxes). Furthermore, clearly state that taxes will be charged on your website so there’s no sticker shock at checkout. It would also help to show customers what their costs will be in their currency.
Clearly, there is a lot you can do about returns, payment issues like return fraud and chargebacks, and even VAT for international sales. However, a few additional tips never hurt anyone. Here are four easy things you can do moving forward, whether you’re looking for simple solutions or something more intricate:
Which leads us to some more detailed solutions. Obviously there’s plenty of room for error regarding customer service, and having professional help that knows what they’re doing is always welcome. Assuming you have the means, or have recently evaluated your business model and made some wiggle room, there are plenty of outsourcing options to choose from:
So all in all, whether you’re a part of a large indie team, or a solo developer, there are plenty of things you can do to provide better customer service. Some options, such as Direct Messaging on Twitter, or automatic responses sent directly from your email, are completely free. Other options are paid, but are useful for those with a large number of daily inquiries. After all, you wouldn’t handle 60,000 issues in a day alone, would you?
Whatever solutions you put into practice, remember, you can handle it all―until you can’t. Know your limits, and when the time comes, consider outsourcing. Otherwise, your response time—and ratings—could go downhill.
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