Even on a great sales day at the salon, a chargeback ruins my mood.
As a card user, a chargeback is a valuable incentive to use credit cards. If my card is used fraudulently, the merchant who accepted the card is liable to pay for it, not me.
As a merchant, though, you now have to battle for that payment you thought you already received. You have to figure out and collect all the paperwork that needs to be sent to defend this chargeback, knowing that you have a 50-50 shot at winning it. The merchant provider has already taken the funds out of your account – a strange “thank you” for using credit cards in the first place. You never get a “cash chargeback!”
But here is the thing …
A business that does not accept credit cards is certainly losing out on an enormous pool of very good, paying customers. So unfortunately, you have to live with chargebacks.
If you are smart about how you accept credit cards, you can protect yourself from the risk associated with chargebacks. No, you will probably not win all chargebacks; but, with proper business process put in place, you can reduce your risk a lot. Policies, enforced through your software, can play a big role here. If your documentation is complete (electronic or paper), you can fight most chargebacks fairly hands off.
If you are completely digital (digital memberships, digital signatures, e-receipts), your software already has all the documentation you need to fight the chargeback digitally stored. Then, when a chargeback is received, it is a matter of automatically faxing the paperwork through your software. That chargeback you would have won now requires no effort. The ones that you will lose anyway, you didn’t have to waste time on. Chalk them up to the cost of doing business.
But wait, there’s more: The Chargeback Fee!
Whether you win or lose the chargeback, you still have to pay that fee.
Having good software and the right merchant is obviously important, as they help you with fighting the chargeback. If your chargeback fee is too high, or if the fee is charged in every single dispute, you should figure out why you are losing those disputes.
A good merchant provider will stand behind the businesses it is accepting cards for, and will work with them on reducing the cost and most importantly, the hassle of chargebacks.
There is also some misunderstanding on what protection you get from the new chip card, if you are set up to accept it. If the card is duplicated fraudulently, you get some protection from the “goods/services not received” type of claim. However, there is no additional protection for the various other types of chargebacks we typically receive. In fact, to date, I have never received a chargeback that could have been prevented with a chip card. Therefore, the value of chip cards in my salons is questionable.
As salon operators, there are many things in a day that demand our focus – from customer service, to employee training, to ensuring that we meet our sales targets. Chargebacks disrupt that focus. With the right process, tools and technology, you can put them behind you for good!
