Credit Card Chargebacks = Negative Energy

If you run a small business and accept credit cards, you know what I mean.

You’re just going along working your butt off trying to build your business and provide great service to customers and one day you get a friendly notification from your processor.

“The following transaction has been charged back by the cardholder or the card issuing bank. Your account has been debited for the chargeback amount in addition to a chargeback fee.”

So, the money you collected for a sale is taken away AND you get charged a Fee of anywhere from $15 – $100 in some cases… at least $25 if you happen to process payments with Mindbody. So this happens automatically when a customer files a dispute. No “innocent until proven guilty” — it’s more guilty unless you can prove innocence — and it takes a lot of time and paperwork to prove your innocence. It sucks! For a gym or studio, this could be anything from $10 for a drop in class to $500 or more for a package. Either way, it takes money out of your pocket.

So, what can you do?
There is no one simple answer. This is in part because there are so many different reasons that consumers will file a chargeback. According to Chargeback911, this is a list of the top reasons consumers file chargebacks:

  1. Fraudulent transaction
  2. Products or services not as described
  3. Cardholder doesn’t recognize the transaction
  4. Services not rendered or merchandise not received
  5. Credit not processed
  6. Duplicate processing
  7. Transaction amount differs from the agreed upon amount
  8. Cancelled recurring transaction

Given this list of reasons that consumers file a dispute, it really comes down to good business practices. Here are a few things we all should be doing as a general rule to provide great customer service which should help prevent chargebacks.

  1. Be very clear about what services you are offering up front. Provide thorough descriptions on your website or scheduling management software.
  2. Be very clear about your policies. Ensure customers making purchases are aware if you have strict ‘no show’ polices or ‘no refund’ policies.
  3. Provide receipts to customers either in person or via email and make sure it describes what they purchased and for how much.
  4. If you promise a credit or refund, process it immediately.
  5. If you make a mistake in charging your customers, inform them and let them know you are working to fix it.

If you do all these things, it should minimize your chargebacks, but you will never eliminate them. They are a fact of life in modern commerce.

So, treat your customers right. Communicate clearly about your products and policies. And sign up for fitli.  🙂

It’s also important to know what fees you are paying your processor. You just might be surprised what they slip in there. Learn more here.