Five important reasons to avoid chargebacks

Five important reasons to avoid chargebacks

Five important reasons to avoid chargebacks

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Written by Success-Team

Updated over a week ago

 

Situations where your client wants their money back after paying you can be challenging to navigate. In some cases, you may agree with them, while in others, you may not.

In either case, it's important to avoid having your client initiate a chargeback through their bank or credit card provider.

Here's why:

Chargebacks cost you money.

Our payment processor charges a $15 fee any time a chargeback is put through on your account. The cost is to cover the overhead involved in processing this type of a reverse transaction, which is much more complicated than a refund.

Chargebacks tie up your other payments

Because the issuing bank or credit card has all the power in chargeback situations, our payment processor must immediately return the funds when a chargeback is issued. If the funds were already paid out to your bank account, a recovery process must occur, which can prevent further payments from being transferred to your bank account for up to 10 days.

Chargebacks take a long time to resolve.

If you choose to dispute a chargeback, our payment processor can help you fight it. But this process can take a long time. In some cases, a dispute can take 45-90 days to resolve, and in the end, there's no guarantee your dispute will be successful.

Chargebacks hurt your reputation.

Because of the time and cost involved in processing chargebacks, payment processors try to avoid them as much as possible. In some cases, this can mean denying someone access to payment processing if they have a history of chargebacks with their clients. This can result in your payments account being closed and being turned down by other payment processors in the future.

Refunds are an easier alternative.

You can issue a refund in one of two easy ways:

  • If the funds have yet to be sent to your bank account, you can issue a refund, and the full amount will be returned to the payer with no fees charged to you. 

  • If the funds have already been sent to your bank account, consider returning the funds to the client by cash or check since issuing a refund through the app would require us to recover the funds from your bank account, which may tie up other payments at that time.

In either case, with a refund, you avoid the costly and time-consuming problems associated with chargebacks.


For more on how you can protect yourself against chargebacks, check out:

How Can I Protect Myself Against Chargebacks?


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