A dispute (also known as a chargeback) occurs when a cardholder questions your payment with their card issuer. A client may claim that they did not approve a charge, or that a charge is fraud. This is very rare but can happen. Using best practices for chargeback prevention can reduce the likelihood of a chargeback happening.
If a chargeback does occur, you can Handle a Payment Dispute or Chargeback in your Stripe Dashboard if your clinic is processing payments with Ensora Payments & Stripe, or contact Ensora Payments at payments.support@ensorahealth.com or 877-288-5583 (option 2 then 6 for Payments). If a chargeback occurs and your clinic is processing payments with Vantage, contact the support team at 1-888-974-7081.
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What is a Chargeback?
Chargebacks or Disputes are the actions of when a client (cardholder) disputes a credit card transaction with their financial institution. There are associated chargeback fees when a chargeback is issued against your merchant account. You will receive a notification with details of the chargeback and opportunity to refute it. The chargeback/dispute reason may vary. More details on common reasons associated with chargebacks are listed below. It is also important to note excessive chargebacks is a red flag to merchant processing companies and can result in disablement of merchant services.
What Happens When a Chargeback is Issued?
The cardholder’s financial institution typically requires the cardholder to supply documentation to support the reason for their dispute. A credit is issued back to the cardholder right away as a “conditional credit”. The credit is debited from the linked bank account for the merchant account. It is up to the merchant then to decide what action (if any) to be taken next.
What are the Options to Consider when a Chargeback is Issued?
There are a few options to decide when a chargeback is issued against your merchant account. A chargeback is time sensitive. It’s important to keep this in mind when considering your options. You have a limited amount of time (usually 7-21 days, depending on the card network). To learn more, see Handle a Payment Dispute or Chargeback.
Do Nothing: You can choose to do nothing and take no action. This means you are choosing NOT to contest the transaction. The client is issued back the funds as the initial credit took place. You may still need to adjust payment records (invoicing, statements etc.) within your platform for proper reconciliations of your business financial records.
Contact the Client: Some chargebacks can be issued by mistake. The cardholder can accidentally dispute a transaction when that may not have been the intention. This happens more often than you’d think! Contacting your client to talk about it first can help to confirm if this may be the case. If you find this to be true upon speaking with your client, request they contact their financial intuition and request to drop the dispute. Request they provide you with details of the dispute being dropped. Request that your client provide a signed general letter stating they have taken steps to request the dispute to be dropped with their financial institution. You can submit this letter as documentation on your end to support the return and reissuance of those funds to you.
If you are unsuccessful in connecting with your client and believe you are rightfully owed the disputed transaction, then you may consider refuting the chargeback.
Refute the Chargeback: You can choose to refute the chargeback. This means you are choosing to refute the chargeback. Refuting the chargeback means you are requesting the payment be issued back to your business. This means including supportive documentation to validate your request. Supportive documentation includes copies of signed policies such as credit card consent forms, no show policies or any other applicable forms previously signed by the cardholder. Copies of invoices, statements and any other relevant details can be helpful. The situations often can be unique in circumstances so it can also be helpful to include documentation to support the details of the situation. Additional details included can consist of communication exchanges (emails or text messages) and a signed general letter by you to explain details of the situation.
The initial notification of the chargeback you will receive will include the reason the transaction was disputed. Providing documentation that addresses the chargeback reason and supports your case can be helpful in your favor.
Chargeback/dispute reasons can vary based on card brands. Here’s a list of common dispute reasons and suggestions on what documentation can be helpful to provide to refute the reason.
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Incorrect Amount
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No Cardholder Authorization
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Duplicate Processing
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Other Fraud-Card Absent Environment
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Recurring Payments
It can take 60-75 days, depending on the card network, to evaluate the evidence and decide the outcome. The full lifecycle of a dispute, from initiation to the final decision from the issuer, can take as long as 2-3 months to complete.
That outcome statement will be either the final decision in the favor of the cardholder and you as the merchant “lost the chargeback”. Or the alternative the final decision was in your favor and you “won the chargeback”.
Best Practices to Prevent Chargebacks
Prevention of chargebacks can be extremely helpful for your business. Here are a few suggestions you may consider implementing if you haven’t yet.
Policies and Consents: Ensure you have proper polices and consents in place regarding services and payments. Credit card Consents, No Show Polices, Cancellation or Late Cancellation polices are helpful. Be sure these include payment processing times and fees for late rescheduling and/or cancellations. This detail can be helpful if you do not process the payment on the same day as the service.
Review your payment policies in detail with clients prior to services being provided. Ensure the client signs your policies and understands them. Clear communication on these prior to can help avoid any future confusion regarding payment. If someone other than the client is paying for services, ask that the cardholder also review and sign any of your policies including a credit card consent form. Chargebacks are more likely to occur with new clients so it’s important to take the time to review closely your policies with clients.
Process Payment on the Date of Service: As mentioned above you can process the payment outside of the service date; however, it is still recommended to fulfil the payment on the same date as the service. If you intend on processing the payment outside the date of service and your policies do not state the detail of when payment will be processed, prior to charging the payment, it can be helpful to first communicate with client/cardholder in writing that the payment will be processed on X date. Be sure a receipt of payment is provided to client upon payment processing.
Does Business As Name (DBA Name): The “Does Business as Name" is what will show on the client’s bank statement side. Be sure the client knows what your DBA name is. Choosing a DBA name that your client will recognize is helpful in prevention of a chargeback.
Continue Communication with Clients: Stay in touch with your clients! Encourage them to connect with you if they see a charge that they believe is from your services but not certain. Encourage them to check with you before they dispute a transaction with their bank. This can often be related to confusion regarding the DBA name.
Refund any Suspicious Charges: If you see any suspicious charges refund them right away. Examples of these may be generated if you allow clients to make online portal payments or if you may have multiple staff members collecting client payments within your platform. Indicators of these types of payments may be for larger amounts outside of your typical service rates.
Stay alert for emails and notifications: If a chargeback is issued to your merchant account, you will receive an email with details about the dispute.