As a webshop owner, there are many aspects to manage. This guide will help you navigate the rules regarding payments and dropshipping.
It's crucial to comply with applicable laws. Your website must meet the requirements of consumer law and GDPR, as violations can result in fines and sanctions. Ensure that your customers are provided with clear and accurate information, especially regarding payment terms. Unlike physical stores where customers pay and leave with the product immediately, online shops typically charge payments upon dispatch. If you use a different business model, such as dropshipping, make sure your terms and conditions clearly outline delivery times and payment policies.
What Is Dropshipping?
Dropshipping is a unique approach to logistics and inventory management. Unlike traditional online businesses that maintain their own stock or production, dropshipping operates differently.
With dropshipping, you don't manage your own inventory or handle product packaging and shipping. Instead, you work with a supplier or an external warehouse (sometimes referred to as a "fulfillment center") that processes and ships orders on your behalf.
When a customer places an order on your website, you forward it to your supplier or fulfillment partner, who then ships the product directly to the customer. This model reduces costs, as you're only responsible for supplier fees, and saves time that would otherwise be spent preparing and dispatching orders.
Learn more about how dropshipping works and its benefits.
"You can only charge payment when the product has been dispatched."
When Can You Charge Customers?
As mentioned above, payments can typically only be charged when the product has been dispatched and is en route to the customer. Automating this process can simplify operations, ensuring payments are charged automatically at the time of dispatch. According to Section 1 of the Danish Marketing Practices Act on fair marketing conduct, it’s essential to wait until dispatch to demonstrate fair treatment of consumers.
If you'd like to know more, you can read the full text of the law here.
What does fair marketing conduct entail? It means respecting your customers and conducting your business responsibly. For example, you shouldn’t charge payment before the product is on its way unless prepayment has been explicitly agreed upon. Violating this rule constitutes a breach of the law and may result in action from the Danish Consumer Ombudsman. Additionally, consider the Sales of Goods Act, which states that buyers are only obligated to pay when the goods are delivered.
What Rules Apply to Dropshipping?
For the most part, the same rules apply to dropshipping: payments can only be charged when the product is dispatched. However, in this case, the dispatch point refers to when your supplier ships the product from their warehouse. This means you must place the order with your supplier before charging your customer.
Dropshipping requires insight into your supplier's processes and sufficient documentation. This helps you avoid prepaying for products on behalf of your customers. Some businesses manage this via email, while others invest in an integration.
An integration can streamline the dropshipping process, automating tasks like placing orders and charging payments. One such tool is Vendino, a platform that supports your dropshipping business. With Vendino, you can discover products, automate processes, and ensure payments are only charged when products are dispatched from the supplier. This helps you remain compliant with the law.
Find a simple overview of e-commerce payment regulations here.
A Reliable Payment Solution Secures Your Business’s Profitability
As mentioned earlier, running an online business requires attention to various elements. Like any other business, you need to attract customers, sell products, and, ideally, generate a profit. To achieve this, having a reliable payment system is key.
To accept payments from your customers, you need a payment solution that works seamlessly. At pensopay, we make it easy by combining acquiring and gateway services in one place. Our customer support team is always ready to help with any questions you might have about payments for your webshop. You can also browse our help center, where we've answered frequently asked questions!
As a Pensopay customer, you'll receive a checklist to ensure you cover all the essential details before launching your business. This checklist includes advice on everything from drafting terms and conditions to placing payment icons on your site.
We recommend that our dropshipping customers speak with our partner Vendino, a Danish software company specializing in dropshipping. They’re ready to assist and answer all your questions.
Learn more about how Vendino can support your dropshipping business here.
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