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The reason for a cancellation fee is because vendors that use the CC service get charged a small percentage (usually about 3% or so) every time a transaction takes place, whether its a sale or a refund.
Ex 1 as a sale: You pay $100 for an item on a website, vendor charges you $100, but then CC processing service charges then $3, so technically the vendor only "makes" $97.
Ex 2 as a refund: You pay $100 for an item on a website, vendor charges you $100, but then CC processing service charges then $3, so technically the vendor only "makes" $97. And then you ask to cancel your order, the CC processing service takes another $3. So although you get your full $100 back, the vendor technically lost $6 in the transaction.
To offset this, they charge these cancellation fees, restocking fees, whatever they want to call it.
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